Masters Golf Showcases Betting Battle, Paddy Power Boss Says

(Bloomberg) -- Gambling companies are having to offer customers ever more tempting incentives to wager with them as competition intensifies in Europe's betting market, according to the head of Paddy Power Betfair Plc.

“The competitive nature of the industry right now is pretty extreme,” Chief Executive Officer Breon Corcoran said on a conference call Wednesday after the owner of Paddy Power bookmakers and the Betfair betting exchange reported a surge in first-quarter profit.

Rapid growth in online gaming is leading to increased competition as incumbent operators seek to add customers and new entrants aim to get in on the act. Corcoran cited last month's U.S. Masters golf championship, where Paddy Power thought its offer to pay out on the top eight finishers for so-called each-way bets would lead the industry. In the event, others matched it and rival Skybet provided even more generous terms.

Paddy Power Betfair shares fell 4.3 percent to 8,395 pence at the close of trading in London, even after the company said first-quarter underlying operating profit more than doubled.

Analysts pointed to slower growth in the amounts wagered on sports events during March. Sportsbook stakes were up 9 percent at constant exchange rates in the quarter, having been 12 percent ahead after two months.

Garcia's Victory

The slowdown partly reflected customers having had more money to wager in March last year after winning record amounts at the Cheltenham horse-racing meeting. “However, it also likely reflects just how competitive the U.K. market is at present,” David Jennings, an analyst at Davy, said in a note.

Results at sports events such as this year's Cheltenham festival favored bookmakers in the first quarter, though April wasn't so good, the company said. Last month saw fewer surprise outcomes in Premier League soccer games, while Sergio Garcia's victory in the Masters and One For Arthur's triumph in England's Grand National horse race also cost the bookies.

“Overall gross win margins were weak in April,” the bookmaker said. Revenue momentum in the month was “a bit better,” it said.

To contact the reporter on this story: Paul Jarvis in London at pjarvis@bloomberg.net.

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Thomas Mulier