In the past fortnight UK bookmakers Ladbrokes and William Hill have both made moves to add to their Irish retail chains. Ladbrokes recently paid a reported 10m to acquire John Harney Bookmakers, adding 12 shops to its estate and in the process becoming the largest betting shop operator in the country with 159 outlets. Another family-owned chain, Molloys, is currently in talks with William Hill with a view to selling its 10 shops.

Many in the industry are betting that several more bookmakers will change hands in the coming months. "It's probably something you're going to see more of, " said NCB analyst David Odlum, who believes it is becoming "harder for some of the smaller companies to compete".

Irish bookies find themselves at a curious juncture. Demographic and economic trends are playing right into their hands but while the climate is favourable, competition for a place in the sun is fierce.

The national appetite for gambling is not in doubt. Paddy Power grew turnover at its 149 betting shops by 15% last year, to 794m. Even as it announced that topline growth, however, the company warned that its margins were under pressure in an increasingly competitive Irish market. Paddy Power said its gross win margin in its Irish shops . . .

the cut it takes each year on all bets placed . . . would fall from a historical range of 12%-14% to between 11% and 13% from 2005 onward.

It's getting tougher at the top, with predictable consequences for those further down. Increasingly, bookmaking has become a volume business. With margins under pressure, scale is key to success. Larger players, such as Paddy Power, Ladbrokes, William Hill and Boylesports are expanding. Some smaller players, such as John Harney, are taking the opportunity to exit and in the middle, several companies are wondering which way to jump.

"You either have no shops or you have 50 shops, " said one bookmaker who is expanding his mid-sized chain. "I do believe the rationalisation will occur."

The industry is still fragmented.

There are over 1,000 betting shops in Ireland with only five chains owning more than 50 shops. Those below that threshold include Bruce Betting, Celtic Bookmakers and Tullys, all in the 30plus bracket.

Tullys has already been the subject of rumour, denying last week that it was on the verge of selling to Ladbrokes. Celtic and Bruce, meanwhile, are understood to be looking to add to their chains rather than sell up.

Further down the food chain, industry sources point to Galway's Mulholland Bookmakers, Cork's Cashmans and Dublin-based Terry Rogers and Banbury among the more attractive targets with 10 shops or more.

"It's very tempting when the English [bookmakers] have the money and they want to expand, " said Monica Hackett who, with her husband John, owns Hacketts Bookmakers.

"For smaller players with eight or nine shops it's difficult to compete. . . I know for a fact in a number of shops that people are finding it tough, " she said.

Hacketts, which has 50 shops, is one of the companies which has been at the crossroads.

It has decided to expand rather than exit. Hackett said the company had been approached "numerous times" to sell but it is now more likely to be an buyer.

"We're hoping to expand to 70 shops, " she said.

The company has an open mind on whether to do so through organic growth or acquisition. Hackett is well aware that in the current climate there are plenty of opportunities to buy. "We're always on the look out for shops."