Town took an early lead before Shelbourne took over.
Athlone Town suffered defeat last night in the Leinster Senior Cup.
Ian Ryan's side were beaten 4-1 away to Dublin side Shelbourne, leaving the side winless after their opening two games.
Patrick Ferry opened the scoring for Town, before Daniel Ring bagged a hat trick alongside a goal from Joey Wuna to seal a comprehensive victory.
They return to action at home to St Peter's in Athlone this Friday for the final group game.
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