Ireland Bookmakers May Struggle in Midst of Potential Collapse
Much talk has focused on the Republic of Ireland being the most likely to abandon the Euro. Ireland has taken quite a hit in recent months. Could the country become the next Iceland?
DP Program had this to say about the dire situation in Ireland:
Until a year ago, the Republic's Celtic Tiger economy, which attracted such blue-chip companies as Dell, Microsoft and Intel, seemed unstoppable. In a decade, the Irish economy grew by almost 90 per cent, catapulting it from one of the poorest countries in Europe to the fourth-richest per capita. Government advisers from as far afield as Chile and Israel made pilgrimages to marvel at a model that they were desperate to emulate.
Not any more. All of a sudden, Ireland's debt-fuelled economy, built largely on a construction boom, has collapsed in a more spectacular manner than almost any other in Europe. Irish government bonds are rated as the riskiest in the EU (see graphic), and there has been panicky talk of Ireland as "the next Iceland".
On the streets, there is a whiff of revolution, with 120,000 people staging Dublin's biggest mass rally in 30 years last weekend to protest at the government's handling of the economy and its decision to impose what amounted to a pay cut on public sector workers. The unions have now threatened a "Doomsday" strike next month if the prime minister, Brian Cowen, does not think again. As the celebrated Irish economist David McWilliams put it: "The entire Irish episode will be studied internationally in years to come as an example of how not to do things."
A product of Ireland's thriving economy has been the bookmaking business, for which Paddy Power is not just the largest bookmaker in Ireland but the third largest in the United Kingdom after Ladbrokes and William Hill.
Gambling is no longer considered a "recession proof" industry as Las Vegas has already shown.
Paddy Power was scheduled to report earnings on Monday. The shares have fallen 51 cents, or 4.4 percent, to 11 euros. Still the bookmaker was hopeful of keeping on track for underlying profits of €75m. Likewise, Paddy Power is one of the few groups expected to deliver a yield of 5.1 per cent in 2009, according to Goodbody projections. They are one of the few shining stars in Ireland's economy, a star that might not stay lit for much longer.
The online gambling sector overall is worried that as more people lose jobs, less money will be wagered on sporting events. There is also a fear of chargebacks.
Jagajeet Chiba, Gambling911.com
