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PaddyPoker and Pari Mutuel Urbain In Deal
11/12/09 - Irish online and offline bookmaker Paddy Power has confirmed its deal with the French gambling monopoly Pari Mutuel Urbain (PMU) which will smooth its path into the liberalised French gambling market early 2010.
The bookie firm also said it remains on track to meet market expectations for full-year profits, boosting its shares by 5.6 percent midweek.
The agreement with PMU will see Paddy Power committed to a five-year outsourcing deal to provide betting technology and pricing to the French horse racing operator, the largest betting organisation in Europe with Euros 9.3 billion of turnover in 2008, according to the Reuters news agency.
Analysts were enthusiastic about the deal, opining that it could open other doors for Paddy Power in a B2B sense with other French and European companies as Europe is expected to open up and regulate rather than confine gambling to state monopolies. One alalysts characterised the deal as a massive catalyst for Paddy Power stock.
Reuters reports that Paddy Power's financial director Jack Massey expects the deal with PMU will come into effect around May or June 2010, adding some Euros 3 to 5 million in revenue by 2012 and open up other opportunities.
"The strength of the deal is the quality of the partner which gives us an excellent calling card of other such opportunities that may emerge," Massey said in an interview with the news agency.
Paddy Power's md for non-retail and development, Breon Corcoran, added that Paddy Power expected to expand further through outsourcing deals and partnerships with local partners as a number of regulatory markets open up over the next three to five years.
The deal will create 50 jobs at Paddy Power's Dublin headquarters by June 2010, with 200 additional jobs expected in the following three years.
The company reported on its progress, noting that while sporting results were adverse for the 19 weeks to November 10, 2009, turnover for the period had grown strongly as its presence in the UK increased to 80 shops after it added 22 outlets earlier this year.
Paddy Power is on the Orbis sports platform, but it is understood that PMU has decided to outsource the risk management and pricing functions to a third party.
Paddy Power chief executive Patrick Kennedy said that the agreement with PMU was an impressive start for the company's new B2B division, and that the firm would be capitalising on its expertise and technology to close agreements with other major betting companies.
The chief executive of PMU, Philippe Germond commented: "This partnership is going to enable PMU to offer sporting bets online under its own brand and retain direct management of its client database. Paddy Power will provide us with its expertise in sports betting. Through this partnership PMU is given the means to be ready for the opening of the online betting market in France next year."
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