TAKING odds on the Lotto helped maintain profits at Paddy Power, the country's largest chain of betting shops, last year. But operating profits were static, at £2.24 million, despite an 18 per cent increase in turnover, according to results published by the company yesterday.

Paddy Power's managing director, Mr Stewart Kenny said yesterday that the game known as lucky numbers, where people bet on numbers coming up in the National Lottery draw, represented about two thirds of the company's profit.

The long hot summer and cold winter, whereby many race meetings were abandoned, were cited as factors which put pressure on operating margins in the second half of the year.

Turnover increased by 18 per last year to £87.7 million. But the strong rise in turnover did not lead to an increase in operating profits, as operating margins slipped to just under 13 per cent from 13.7 per cent in 1994.

Paddy Power blamed this on the small size of horse racing fields during the summer and the loss of racing at Christmas. The Irish and British lotteries also put pressure on margins.

Pre tax profits rose by 36 per cent to £2.19 million. But the 1995 increase in the pre tax profits reflected payments of management bonuses and an investment write down in 1994 which reduced pre tax profits that year by £551,000.

Mr Kenny said that sales growth from the core betting business has been reduced considerably over the last number of years as a result of competitive pressures from outside the industry. He said the decline had been arrested through an extensive marketing campaign as well as upgrading the shops.

Paddy Power claims to have 23 per cent of the market. It employs more than 450 people and has 90 outlets.