Ladbrokes resilient in face of spreading gloom

Ladbrokes stood out from the gloom that has hit UK businesses by reporting a strong increase in profit, providing further evidence that parts of the gambling industry are resilient during recessionary times.

The UK's biggest betting operator yesterday said group profit rose 10 per cent in the four months to October 31, excluding telephone high rollers.

Gross win - the amount bookmakers retain from wagers after paying out on winnings - rose 12 per cent compared with the same period last year.

Ladbrokes' retail gaming machines are providing it with much of its good fortune.

Gross win from such machines rose 14 per cent, and the average take per machine has risen to £677 from £586 last year.

But it also made a £17m profit out of high rollers and the period compares favourably with last year when it was hit by the introduction of the smoking ban and the adverse effects of the Gambling Act.

Bets taken over the counter registered a fall of 2 per cent in gross win after free bets are taken into account, one adverse factor being the loss of the money-spinning Ebor horseracing meeting at York.

Ladbrokes also suffered from poor results in the last two weeks of October - 14 out of 16 favourites won in football's Uefa Cup - while in horseracing the Breeders Cup meeting in the US went against the bookmaker.

E-gaming provided a 22 per cent increase in net revenue, with full-year profitability expected to be in line with 2007.

Ladbrokes' results resemble those of William Hill, which last month reported a gross win increase of 9 per cent.

John O'Reilly, head of e-gaming at Ladbrokes, said the group was positive about its position. "From where we sit today, this is a pretty resilient business in times of recession," he said.

A tougher market is proving to be Ireland, Mr O'Reilly added, due to increased competition and the increase in betting tax from January 1.

That view was borne out in Paddy Power's trading update. The Irish bookmaker said retail turnover in the 19 weeks to November 10 was down 9 per cent compared with the prior year, and said the betting tax increase would cut operating profit by up to €10m (£8.5m).

Mr O'Reilly said he would be surprised if the UK chancellor followed suit by increasing betting tax in his forthcoming pre-Budget report, saying the Treasury would be mindful of the impact on job losses.

Shares in Ladbrokes rose 3¾p to 161¾p, while Paddy Power fell 80 cents to €12.30.

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