Betfair says heading for top end of profit target

Online gambling exchange Betfair said today it was on course to reach the top end of its profit guidance as investments in Italy and New Jersey prove less expensive than feared.

Betfair also announced it had signed a deal with British commercial TV company ITV to buy key advertising slots during World Cup and Champions League soccer games, raising the profile of the company.

Betfair, which operates an exchange that allows gamblers to bet against each other, has been slimming down its operations and cutting costs under chief executive Breon Corcoran, seeking to focus on fewer markets where returns are more secure.

Under Mr Corcoran, Betfair has also developed its more conventional "sportsbook" betting, where the bookmaker sets the odds. That broadens its appeal to mainstream gamblers but brings it into more direct competition with William Hill and Paddy Power.

Mr Corcoran said the integration of the exchange and sportsbook betting would allow it to offer improved odds on some bets, an initiative it is marketing under the “Price Rush” name.

Earnings before interest tax, depreciation and amortisation (EBITDA) rose 28 per cent to £20.2 million in the three months to the end of January, Betfair said.

“We now expect EBITDA for the full year to be towards the upper end of the previously guided range of between £82 million and £87 million,” the company said. Its financial year runs until the end of April.

The cost of investment in expansion in Italy and New Jersey was expected to be at the lower end of a forecast of £5 to £10 million.

Betfair had been forced to defend its strategy after rejecting a £1 billion takeover by private equity firm CVC Capital Partners last May.

The shares are now trading well above the 950p offer price from CVC that the company rejected. However, the price is still a long way short of the 13 pound level at which they floated in October 2010. (Reuters)