Betfair Paddy Power sets pace in Bookmakers Shakeout Derby

While the latest update isn’t quite as good as it looks, boss Breon Corcoran still has his horse in Group One race winning form. His rivals are going to find it tough to match the pace he’s setting

Paddy Power Betfair formed after a merger last year (betfair)

Betty Power – sorry Paddy Power Betfair – has long been the favourite to win the Bookmakers Shakeout Derby.

Now the company has consolidated its position at the head of the betting. Chief executive Breon Corcoran’s baby has raised its forecasts for its 2016 underlying earnings (before one off costs relating to the merger of the two companies that make up its name) to between £390m and £405m.

That’s a hefty jump from its original prediction that profits would come in somewhere between £365m-£385m.

You might say that the third quarter results statement contained a reverse profit warning.

But is the upgrade as good as it looks? Not quite. There is, of course, a bit of the pound’s weakness in there. Earnings from the company’s non UK businesses are flattered by that but the net benefit amounts to only a couple of million pounds.

A rather larger chunk of good news comes from favourable sporting results, which the stock market always seems to over-react to on both the up and the downside. Investors can never quite seem to get their heads around the fact that bookies’ earnings are always going to be volatile because while they often win, sometimes the punters come out on top. And if they didn’t, the bookies wouldn't long have businesses in which to invest. It could easily go that way over the next few weeks, and that would take some of the shine off the company’s forecast.

However, there is also a further £5m boost coming from the fact that Paddy Power Betfair is getting its post merger integration done ahead of schedule.

That’s the key figure. No one ever cries for bookies, but the environment is particularly challenging for them right now. They have to pay more tax, regulation is squeezing them, and Brexit is a curve ball that is making life difficult for just about any business you might care to mention.

Even with all that going on, however, Betty Power is steaming ahead and looks to be in top form. If it the integration contineus to go smoothly, watch out.

The company has also laid down a marker for the rest of the industry with its performance, and particularly Ladbrokes and Coral, which, having got just their own tie up approved, now have to prove they can keep up.

In chief executive Jim Mullen, they might have found the right jockey. He’ll just have to prove he can ride like Ryan Moore on one of Aidan O’Brien’s finest to keep up with the pace set by Paddy Power Betfair.

Still, it could be worse. His horse is in much better shape than William Hill, which hasn’t even got a permanent rider. Some of its owners think it would be best off entering the seller at the bottom of the race card after they scratched its attempt to pull off a merger with Canadian gaming outfit Amaya. But if Hills does that, it might just end up taking a lonely walk around the parade ring. It’s a sad state for the one time industry star to find itself in.

Mr Corcoran, with his prize money all but booked, has good reason to look ahead with confidence. When it comes to William Hill, he’s not even looking over his shoulder.