Shares in Paddy Power Betfair dropped in early morning trading in Dublin on Wednesday as betters made a net £20 million profit against the bookmaker during the Cheltenham horseracing festival in March, dragging on the its first-quarter revenues.

Revenues at the recently merged Paddy Power Betfair rose 16 per cent to £339 million in the first quarter from £293 million a year earlier. However, the result fell short of the £352 million that analysts in Davy had forecast and the £341 million that Goodbody Stockbrokers had pencilled in.

Paddy Power Betfair shares fell 1.1 percent to €114 in Dublin.

The betting giant recorded earnings before interest, tax, depreciation and amortisation (ebitda) that was up 27 per cent to £59 million with an operating profit that jumped 36 per cent to £43 million.

“At first glance, this morning’s release could cause alarm,” said David Jennings, an analyst with Davy, nothing that the ebitda result compares with expectation of £370 million for the full year. “However, once the seasonal profit margin trends exhibited last year are considered, it becomes clearer that the group can still meet expectations for the year, albeit with profitability back-end-weighted once again.”

Paddy Power Betfair reported good performances across all divisions with online sales up 17 per cent to £195 million and retail revenues increasing 5 per cent to £58 million.

Australian derived sales grew by 25 per cent to £58 million and US revenue climbed 22 per cent to £20 million.

“All four of our brands - Paddy Power, Betfair, Sportsbet and TVG -continue to trade well in a highly competitive environment, “ said chief executive Breon Corcoran.

“This is a good start to the financial year is a credit to our colleagues, particularly at a time when we are bringing together two businesses. Our marketing, technology and operations performed well throughout the key spring racing period and we are now focused on preparations for Euro 2016,” he added.

The group said sportsbook stakes rose by 21 per cent to £2.3 billion in the first quarter.

Sports revenues rose 17 per cent to £135 million, while gaming revenue icnreased 17 per cent to £60 million.

The group had net debt of £54million, excluding customer balances at the end of March.

Paddy Power Betfair said integration of the two businesses is progressing well with customers starting to benefit as it shares products.