UPDATE 2-Betfair confident on full-year after in-line Q1

Tue Sep 6, 2011 5:19am EDT

* Core sales down 7 percent to 80.8 mln stg, in line with views

* Says Q2 starts well, August core sales up 12 percent

* Says comfortable with estimates for full year 2012

* Shares rise 7.8 percent, among top FTSE 250 risers (Adds executive comment, detail, updates shares)

By Adveith Nair

LONDON, Sept 6 (Reuters) - Betfair Group , the world's largest betting exchange, said its second quarter had started strongly, following an expected drop in its first-quarter revenue when it faced a tough comparative period.

Trading in the second quarter has been encouraging, including a good start to the football season, the company said on Tuesday.

Chief financial officer Stephen Morana told reporters he was comfortable with estimates for the full year of about 346 million pounds ($557 million) revenue from the company's core business and 390 million in total sales.

"Core business revenue of 346 million pounds equates to between 8-10 percent growth for the rest of the year," he added. "We were 12 percent in August and are pretty comfortable that the signs are positive for the rest of the year."

Core Betfair revenue includes sales from the company's betting exchange plus other sports betting products.

Shares in the company rose 7.8 percent to 677 pence at 0917 GMT on Tuesday, and were among the top percentage gainers on Britain's FTSE 250 index.

Betfair, founded 10 years ago by one-time professional gambler Andrew Black and former JP Morgan trader Edward Wray, said first-quarter revenue fell 7 percent to 80.8 million pounds ($130.1 million) as it faced a tough comparative period incorporating last year's soccer World Cup.

That was in line with the consensus forecast of 79 million pounds, according to data provided by the company.

Betfair acts as an intermediary between gamblers wanting to place a bet or offer odds to others, taking commission on their winnings. Last year, it matched more than 900 million bets.

The company has, however, this year added a traditional bookmaking service to its offering, which it describes as its "risk sports" product.

A steep fall in revenue from risk sports products in May contributed to the lower first quarter sales, but the company said margins in risk products had since May returned to historical levels.

"A couple of other companies have also spoken about May just being a rather odd month where lots of favourites came in," Morana said. "Especially in football - it was the final month of the season across Europe and it seemed to me game after game the favourites kept on winning."

REGULATORY WORRIES

Betfair shares have been hindered by concern over changes to online gambling laws in countries such as Spain, Greece and Germany, and intensifying online competition from traditional bookmakers such as William Hill and Ladbrokes .

The stock has fallen more than 60 percent from highs of more than 1,600 pence it touched shortly after the company listed last October.

Chief executive David Yu said on the call while some countries including Italy and Denmark were progressing with sensible frameworks, others, including Germany, had introduced proposals that were "unworkable" for the entire industry.

Germany may have to relax its draft gambling law to give online gaming firms more scope to operate following criticism from Britain and Malta and rulings by the European Union's top court.

"The regulatory challenge for the industry is to ensure that licensing frameworks that come into place in each European state are commercially viable for the operators," Yu said.

"If there is a situation where national laws are incompatible with European laws, we will certainly want to challenge those." ($1 = 0.621 British Pounds) (Additional reporting by and Matt Scuffham; Editing by Rosalba O'Brien and Hans-Juergen Peters)