Paddy Power and Ladbrokes, the land-based and online gambling operators, reported growth in e-gaming amid declining consumer confidence conditions on both sides of the sea.
Paddy Power, whose core market, Ireland, swung into a recession in late September, revealed e-gaming gross win grew 15 percent in the 19 weeks to Nov. 10.
"Paddy Power's successful online business is a blessing given the poor performance of the Irish retail market," Ivor Jones, an analyst at Evolution Securities, said in a note this morning.
Total turnover in retail declined, the company said, with October turnover down 9 percent, on a like-for-like basis, in both the United Kingdom and Ireland.
Machine gross win, however, grew 22 percent, like for like.
Paddy Power said that the Irish finance ministry's recent decision to double the betting duty rate, from 1 percent to 2 percent, will likely reduce 2009 operating profits by between 9 million euros and 10 million euros.
For the 2009 fiscal year, Dresdner Kleinwort has reduced its forecast, for earnings before interest and taxes, by 11.9 percent.
The company has no debt and cash of 72 million euros.
"The company has plenty of cash on its balance sheet which should see it through the downturn, allow it to gain market share and come out the other side in a more dominant position," Mr. Jones said.
Paddy Power has forecast an operating profit of 75 million euros, in line with previous guidance.
Ladbrokes said that in the 4 months to Oct. 31, e-gaming net revenue rose 22 percent versus the same period last year, "with good growth across the Sportsbook, Casino and Games."
Although the company didn't quantify, it said poker "continues to reflect the highly competitive market," adding that it looked forward to joining Microgaming Software Systems Ltd.'s poker network in January.
Ladbrokes said pre-tax profits, excluding high rollers, grew 3 percent during the period, with group gross win up 12 percent.
Total gross win in retail was up 5 percent, with machine gross win up 14 percent but over the counter down 2 percent on poor results near the end of the period. Net revenue from telephone betting, minus high rollers, fell 12 percent.
Against the backdrop of a contracting United Kingdom economy -- down 0.5 percent in the third quarter -- brokers at Numis Securities and Dresdner Kleinwort have downgraded profits-before-tax forecasts by 9 percent and 5.2 percent, respectively.
Chief Executive Christopher Bell said the company "remains within the market expectation range" for the 2008 fiscal year.
Although Ladbrokes carries net debt of approximately £998 million, it drew banking facilities of £536 million to cover bond maturities in 2009 and 2010 for the amounts of £378 million and £15 million, respectively.
Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.