Ladbrokes Posts Solid Sports Betting Growth In Q1

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Ladbrokes sports betting business growth

Ladbrokes issued a trading update for the first quarter of 2016 that reported 59 percent growth in sports betting net revenues, year over year.

Net revenues for all online businesses were up 36.5 percent.

The market reacted quickly to the positive news, sending Ladbrokes shares up by 4.8 percent, although the enthusiasm waned slightly later in the day. The share price stood at just over £1.19, well above the 12-month low of £0.93 in mid September.

More numbers from Ladbrokes

Overall, UK retail net revenues rose by 4.1 percent, Ladbrokes Exchange revenues increased by 57.2 percent, and Australia net revenues grew by 38.4 percent.

Mobile betting increased by 57.6 percent and now accounts for 77.1 percent of sportsbook staking. The number of active sports bettors increased by 27 percent.

“Our focus remains on best in class customer service, superior quality of product and maximising the multi-channel potential of our business,” commented Ladbrokes CEO Jim Mullen. “We continue to be pleased by the reaction to our increased marketing, our products and multi-channel proposition.”

The statement highlighted one risk for future revenues: the possible introduction of an additional betting tax in Belgium. The government has proposed to increase taxes by adding a 21% sales tax to gambling transactions. The local industry has immediately complained about the commercial impact and is lobbying to prevent the proposal from becoming law.

More growth on the horizon for Ladbrokes after merger?

Ladbrokes is currently preparing to merge with Gala Coral, although the deal is awaiting approval from the UK Competitions and Markets Authority (CMA).

The trading statement warned that the CMA has extended its timeframe for publication of its provisional findings until mid-May. The CMA refused permission for the merger 17 years ago, but is expected to give its approval now subject to the two companies agreeing to certain provisions, which may include the sale of some of its high street betting shops.

The merged company is expected to have a market capitalization of around £2.3 billion ($3.31 billion). The newly merged Paddy Power Betfair is about 50 percent larger with a market cap of £3.6 billion ($5.17 billion).

Legal U.S. sports betting would entice Ladbrokes

Ladbrokes and Coral have strong sports betting businesses in the UK, the rest of Europe and Australia. Ladbrokes has a close corporate relationship with Playtech, and both Ladbrokes and Coral operate internet poker and casino on Playtech’s platform.

However, neither business takes wagers in the U.S. market, where sports betting is legal on a full-scale basis only in Nevada. Should the sports betting market open either at state or federal level, Ladbrokes and Gala Coral would make a push to be participants.

Ladbrokes is one of the oldest betting companies in the world, tracing its roots back to 1800, while Gala Coral was founded in 1926.

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