Fiorente's Melbourne Cup win may have left the punters in clover, but it looks like the bookies took a drubbing.
Paddy Power, the Irish betting giant behind one of Australia's largest corporate bookmakers, Sportsbet, admitted that it lost around $5.7 million on the Spring Racing Carnival due to the run of favourites winning the big races.
Its bookmaker rivals are not expected to have fared any better.
''It is entirely down to the random walk of results,'' Paddy Power chief executive Patrick Kennedy told analysts this week as the company's share price tanked. ''The difference between Fiorente and Red Cadeaux is very many millions, and the gap between them was half a head, and we'd be having a very different trading statement had Red Cadeaux got up.''
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The Melbourne Cup was not the only result that did not go the company's way - sports results across Europe will contribute to a significant profit downgrade for the company - but Australia's big races generated the bulk of the losses.
The 'random' nature of the results means Paddy Power is confident its bottom line will pick up soon with Mr Kennedy saying some of the company's directors have not seen such a run of results against the bookie in three decades.
The losses reflect the big risks taken by corporate bookmakers like Sportsbet, Sportingbet and Tom Waterhouse, which are on the other side of the bet taken by its clients and wear the risk if race results do not go their way.
Paddy Power has invested heavily in the Australian market via its local subsidiary, Sportsbet, and recently paid tens of millions of dollars to sponsor Nine's NRL coverage.
Mr Kennedy said the company's investment in marketing assets like the NRL coverage have been helped by the fact that there has been a slowdown in the marketing war among the various bookmakers vying for new punters.
Mr Kennedy said the ''music has stopped'' and some of the smaller operators like Unibet and Betchoice are ''far less aggressive''.
He said pricing around this premium marketing assets like the NRL coverage have stabilised after experiencing 20 to 40 per cent inflation last year when Tom Waterhouse was rumoured to have signed a $50 million five year deal.
Paddy Power said its Australian operations will account for up to one-third of its earnings this year with online net revenue up 30 per cent for the year to date.
''This has been a very competitive market for quite a number of years. And yet, external data shows that we continue to grow our market share strongly,'' Mr Kennedy said.


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