Two of the United Kingdom's most powerful gambling operators, Ladbrokes and
Paddy Power, announced this week that the economic recession has affected
their businesses negatively, with both reporting a significant decline in the
number of wagers placed in the last few months.
It comes as no surprise that when the market is performing poorly and people
have less money in their pocket, the first thing they will start to cut back on
is entertainment, including betting shops. However, both companies were
seemingly surprised that the effects of the recession were felt so soon on their
businesses.
"The retail outlook is deteriorating far faster than most analysts would have
expected," noted one market analyst, David Jennings. "Most people expected this
sector to start to suffer when unemployment picks up, which would suggest the
outlook is particularly grim."
While Ladbrokes was not forthcoming with too many details regarding the drop
in bets at its outlets, the company did say that the amounts staked fell in the
last four months. Ladbrokes did note that winnings at its Irish stores slid by
11%.
Nevertheless, both Ladbrokes and Paddy Power reassured their shareholders
that profits would still meet analysts' estimates for this year, thanks in part
to the growing success of their online gambling arms. As more people seek cheap
and convenient forms of entertainment, many have found the answer in gambling
from the comfort of their homes.
Paddy Power noted that, due to the Irish government's decision to double the
tax on betting from 1 to 2%, its operating profits would drop to 10 million
Euros.
