Net Bet Blog

Ladbrokes (LAD) released an interim management statement. As the premier bricks and mortar operations LAD is the classic "sector bellwether".

One slight oddity about LAD is that they have a single high roller who is responsible for a very large chunk of their profits.

The bookmaker said profit from high rollers was 40 million pounds over the period but noted activity has recently fallen to de minimis levels.

This single individual has his own team (not surprisingly). This means they are susceptible to (1) him winning big, (2) him leaving. If the highroller is reading this I would highly recommend him clicking on one of my Sportingbet links for Horse Racing or Football betting or indeed, given the start of the first test, Cricket Betting and set up an online account :-)

If he has left this would be a cause for concern. One is question is why LADs deemed it necessary to use Latin in their results. Why not just say that the highroller revenues have fallen to mimimal levels.

De minimis is a Latin expression meaning about minimal things, which is used mostly as part of de minimis non curat praetor or de minimis non curat lex, to say that the law is not interested in trivial matters. De minimis, in a more formal legal sense, means something which is unworthy of the law's attention. In risk assessment, de minimis refers to a level of risk which is too small to be concerned with. Some refer to this as a "virtually safe" level.

There are lessons for others from this statement.



Interim Management Statement [ADVFN]

The Group has continued to make good progress during the period with profits* (excluding profits* from High Rollers) increasing by 13%. Gross win increased by 16% (34% including High Rollers).

The E-gaming division is of most interest:

EGAMING

eGaming has enjoyed net revenue growth of 24% during the period with customer sign ups growing 27% and unique active customers increasing 18%. We have seen particularly strong activity in the Sportsbook, Casino and Games whilst Poker net revenue fell 2% in what remains a highly competitive market. As previously indicated at the Preliminary Results, the business is intent on accelerating growth
through increased marketing and initial results from Bingo and Casino TV advertising have been encouraging. We continue to expect full year profitability in 2008 to be in line with 2007.

Note that once again Poker revenues are down DESPITE their introduction of 3D poker from Playwize (PLW) another stock we follow that I suspect has not long to go as a quoted company. Dire straits would be an understatement. The fact 3D was not mentioned suggests that this experiment has failed for LADs which is not surprising.

The Spanish and Italian expansion is also relevant for those with ambitions in these countries such as Leisure and Gaming (LNG) in Italy and William Hill in Spain.

In a previous post we looked at the rise and rise of online Bingo. All serious players in the online gaming market need to have a Bingo offering as evidenced by recent entries from 888.com, PartyGaming, Ladbrokes (see advert on the right) and others.

Side by side with the growth in Bingo rooms comes the growth in Bingo Portals that act to funnel potential players to the Bingo rooms acting as super affiliates.

The key to the success of a Bingo Portal is the value added facilities that they offer to the Bingo player. These might include room reviews, loyalty points, bonus offers and importantly a sense of community. The punter has to have a reason to return to the portal even after they have signed up and are happily calling “house” on one of the recommended sites.

In a previous post we looked at BingoPort.co.uk. In this post we look at a relative new comer that goes by the name of Bingohideout.co.uk to see how they compare. How many portals can co-exist profitably? In the current land grab how much money should be spent on development? As Cryptologic (CRP) recently found the casino portal business can be a highly profitable one (see previous post on this topic).



This is Bingohideout.co.uk’s pitch:

Welcome to Bingo Hideout
Bingo Hideout is a social network for online bingo fans. Here you can make friends with like minded people, chat in the Bingo Forum and tell others about yourself on your personal profile page.
Find, rate and review bingo sites in the Bingo Directory, read the latest Bingo News and get up to £100 in FREE Bingo Bonuses when you sign up.

Bingohideout.co.uk has everything you would expect from a portal site, most importantly a forum, bingo room reviews, a blog and bingo related news articles. The site is professionally designed and has a female friendly look to it. The Bingo room listings are comprehensive although there are only a limited number of punter reviews. There are however a couple of elements that require attention such as the features and support section (currently empty).

The portal business is a highly competitive one. Every portal needs to have an excellent SEO set up or they will fail to get the punters through the door. The provision of a free bingo site and loyalty points would help although this sort of scheme is often difficult to police effectively.

I have added bingohideout.co.uk to the Bingo links section and we shall return to this topic later this year to see how our two portals are doing.

From an investment perspective there is no doubt that portals can make serious money but they require serious up-front investment and some clever marketing both on and offline to maintain a good market position in the face of limited barriers to entry and some big players sniffing around this market.

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Good article from Bettingmarket.Com.

Italian Betting Market

Government sources estimate that in 2006 the licenced section of the market was valued at around €39 billion, with sports betting and horse race betting currently accounting for 14% of the total market. (By way of comparison, the French betting market is currently estimated to be worth somewhere in the region of €28 billion (£17.4 billion).

The article concentrates on Ladbrokes(LAD).

Following the tender application Ladbrokes was awarded 142 new betting licences, spread geographically across Italy. These comprised the following:

* 33 dedicated horseracing licences (betting centres)
* 58 dedicated sports betting licences (betting centres)
* 51 non-dedicated sports betting licences (betting points)

Ladbrokes has also successfully applied for remote betting licences for horseracing and sport, which were issued on a non-competitive basis to companies that complied with regulatory standards.

Ladbrokes has stated that its strategy is to establish an Italian retail estate through both new licences awarded in the tender process and acquisition of existing centres. Ladbrokes is currently operating 4 shops in Italy, 3 in Milan and 1 in Turin. It has plans to launch a total of 61 shops (30 dual sport and horseracing betting shops, 28 sport only betting shops and 3 horse only betting shops) over the next 18 months. It will also open a further 51 sports corners offering betting in cafes or retail outlets.

Ladbrokes has targeted capex of €104m to fund its expansion in Italy over the next two years; €24m for the initial 12 shops; c€50m for further shop acquisitions; c€12m for licences relating to the new shops; and c€18m for fit-out costs of the new shops.

At the time of the award of the Italian betting licences Christopher Bell, Chief Executive of Ladbrokes plc said:

"We are very pleased with the outcome of the tender which represents a major step forward for us in Italy. We have appointed an Italian Chief Executive who brings extensive local knowledge of the industry to our operations and we will continue to expand our Italian business through acquiring further existing licences."

../

Ladbrokes is now represented in the major cities of Rome, Milan, Turin, Naples and Genoa and since the year end has completed the acquisition of a further eight shops around Turin and Vicenza.

Ladbrokes said that the rollout programme for the 142 new Bersani licences continues, following the licence award in March 2007, with the first shop and corners opened in December 2007. It said that whilst finding premises for new licences remains challenging, they are scheduled to be opened throughout 2008.

The new local language internet site, Ladbrokes.it, was launched in November 2007. Ladbrokes said that its odds service provider, Pianetta Scommesse had increased its customer numbers during the year.

Blog favourite Leisure and Gaming (LNG) also get a mention. They are clearly a small player in Italy but this is entirely appropriate given its low market cap. You have to think that someone will buy them out sooner or later.

The London stock exchanges listed Lesiure & Gaming operates in the Italian betting market through its subsidiary BetShop Italia, a franchised network of over 1000 branded shops and networked retail gaming outlets offering sports betting across Italy. On 9 January 2007, in a trading update for the year ended 31 December 2006, the company said that it was pleased to announce that it had been awarded 47 further licences in Italy (27 for horse racing and 20 for sports betting) to complement its existing Betshop Italia network.

In January 2008 Leisure & Gaming provided a trading update for the fourth quarter of 2007 and guidance for the financial performance of the Company for the 12 months ending 31st December 2007. The Company noted that it had suffered a disappointing second and third quarter, incurring substantial trading losses. For the full year, including all central costs, it said that it expected to report a gross profit of approximately €3.2m and an EBIT loss for the year of approximately €1.6m.

The company said that in relation to Q4 trading, it had achieved net win of €6.6m (vs €7.0m for the equivalent period in 2006)and gross profit of €1.8m (vs €0.3m for the equivalent period in 2006). It said that in December 2007, the Italian regulator published protocols for skill gaming, which will allow for the provision of poker and other new gaming products by the Company in the course of 2008.

Swiss spiv investor Neil craven also has a substantial holding in the company.

An amusing last line - a journalist with imagination....

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Good final year results posted by Ladbrokes (LAD) today. With profits up 60% Ladbrokes are in a strong position.

Here are the highlights:

Financial Highlights

* Operating profit(1) from continuing operations increased by 60.2% to £420.0
million (2006: £262.2 million).

* Operating profit(1) from continuing operations, excluding High Rollers,
decreased by 4.4% to £241.0 million (2006: £252.0 million).

* Total gross win increased by 29.9% to £1,286.4 million (2006: £990.3
million). Total gross win from continuing operations, excluding High
Rollers, grew by 6.0% to £1,036.8 million (2006: £978.1 million).

* Net debt of £917.0 million with cash generated by operations of £421.1
million.

* Effective tax rate(2) of 15.6%.

* Final dividend of 9.05 pence per share (up 5.2%).

* During 2007, 19.9 million shares were purchased through Ladbrokes' share buy
back programme. The buy back programme has continued in 2008, with a further
10.3 million shares purchased.

* Profit on disposal of Vernons of £46.0 million.

Ladbrokes Chief Executive, Christopher Bell, commented:

"Ladbrokes has achieved record profitability(3) of £420.0 million, benefiting
from a buoyant performance from Telephone Betting. Following a strong finish to
2007, we have made a positive start to the year. We will continue to develop the
business through new products and channels, both in the UK and overseas and will
promote our brand and products through TV advertising, whilst remaining vigilant
on costs."

Items of interest for the other companies that we follow on this blog:

First, Leisure and Gaming (LNG) in Italy. Ladbrokes already has 26 shops open. Why then are LNG so slow in opening when they have permission for 58? The website will clearly add to the competition in the online market. However, the price that Ladbrokes paid for 17 shops allows us to give some valuation to LNG. If each shop is worth a million it puts LNG's low rating in perspective.

European Retail - Italy

* The newly re-regulated Italian betting market presents a good opportunity
for Ladbrokes. During 2007, 13 existing betting shops were acquired for a
cost of £16.7 million, giving a total of 17 acquired shops by the year end.
These shops traded in line with our expectations during 2007. Ladbrokes is
now represented in the major cities of Rome, Milan, Turin, Naples and Genoa
and since the year end has completed the acquisition of a further eight
shops around Turin and Vicenza.

* The rollout programme for the 142 new Bersani licences continues, following
the licence award in March 2007, with the first shop and corners opened in
December 2007. Whilst finding premises for new licences remains challenging,
they are scheduled to be opened throughout 2008.

* Our local language internet site, Ladbrokes.it, was launched in November.
Our odds service provider, Pianetta Scommesse increased its customer numbers
during the year.

* We have established a head office in Milan which is focused on the expansion
of the Italian business.

* Gross win for the year was £6.5 million, with operational and administration
costs of £7.3 million and duty of £0.8 million, resulting in a start-up loss
of £1.6 million for the year.

On the subject of egaming in general shedding some light on the Poker sector:

eGaming showed good profit growth for the seventh consecutive year, driven by
growth in Sportsbook, Games and Casino products, with Sportsbook in particular
delivering a buoyant performance. The competitive landscape remains tough for
Poker with high customer acquisition costs and margins squeezed by rakeback and
other promotional offers. Unique active players across our range of products
increased 9.4% to 601,000. The acquisition of Sponsio, our Nordic marketing
partner in January 2007 helped us to increase our profit conversion from 33.0%
of net gaming revenue in 2006 to 38.3% in 2007.

Our objective for eGaming remains the achievement of continued profit growth
through product innovation and market development, whilst respecting
jurisdictional barriers. Moving forward, we intend to increase our investment
levels in customer acquisition which will maintain profitability levels in the
short term but drive profit growth in future years.

More specifically on Poker and of interest to Playwize (PLW) investors comes news of the 3D product offering. This is suggestive of good news for PLW.

Poker net revenue declined by 11.4% to £31.0 million, impacted by increased competition in our key European markets. Unique active players for the year were down 1.9% at 151,000 and yield per unique active player was down 9.7% to £205. Net revenue for the second half declined year on year by 7.8% to £15.3 million. In the second half our customer loyalty programme was enhanced and 3D poker was soft launched in November. The popular Ladbrokes Poker Cruise took place early in 2008 and the coming year will see further developments to the site including multi-currency tables and a full launch of the new 3D application, complemented by a more aggressive affiliates programme.

The link below is an example of the type of 3D Poker advert we can expect. Of course all new signs ups most welcome. It is a great product.

Ladbrokes (LAD) the bricks and motar specialist gambling company is set to expand online. They have made a couple of interesting forays into this area and their affilate setup is one of the best we have come across.

Should they then buy Parlay? This would extend their growing Bingo business which promises to be a significant growth area. Compare the value of Parlay (£6.5m) with that of Probability (PBTY) quoted on AIM.

Today's Times covers this possible aquisition. Selling the land based Casino is a good idea and the cash would come in handy for a few online purchases or overseas expansion.

Ladbrokes is a bet to expand online [Times]

THE UK’s biggest bookmaker, Ladbrokes, is in talks to acquire online-bingo specialist Parlay Entertainment.

It is one of a small number of parties locked in talks to acquire the business, which is listed on the Toronto stock market.

Parlay, which has a market value of C$13m (£6.5m), is one of the world leaders in offering an internet version of bingo.

It runs online games on behalf of clients including Butlins, Ann Summers and Yahoo. Bingo is regarded as one of the fastest-growing segments of the online-gaming industry.

The expansion of its online operations comes as Ladbrokes prepares to sell its only bricks-and-mortar casino.

The leisure group, which will present its annual results this week, has received several approaches about the site in Paddington, west London, and is thought to be in discussions with a number of rivals over a deal.

Ladbrokes opened the casino and sports bar in the summer of 2006, but it has now decided to quit the market altogether.

Last month it announced that it would not bid for any of the 16 casino licences created by the government as part of its shake-up of Britain’s gambling laws.

Ladbrokes previously had a large casino division, but this was sold to Gala-Coral in 2001. The Paddington operation was the only new gaming venue it had opened since that deal.

Analysts suggested that rival casino companies such as Genting, Harrah’s, Rank and Gala could all be interested in acquiring the Paddington site as gaming licences for central London are scarce.

Ladbrokes may confirm the talks at its results presentation on Thursday, when the company is forecast to deliver operating profits of about £360m.

Shares in Ladbrokes, William Hill and high street bookmakers are coming under further pressure as a result of a government investigation of high stakes gambling machines.

The new £500 jackpots are a more serious type of machine that the average punter is used to. With LADs and others earning a 1/3 of their income from terminals investors have every reason to worry.

Government plans gaming machines inquiry [Reuters]

LONDON (Reuters) - The government said on Wednesday it planned to take a closer look at whether high-stake gambling machines are fuelling addiction, hitting shares in bookmakers who make around a third of their profits from the terminals.

The investigation, to be undertaken by the country's gambling watchdog, overshadowed news the government plans to scrap a levy on bookmakers' profits from horse racing which had been used to help fund the sport.

Sports Minister Gerry Sutcliffe told Reuters the government would take a tough stance if high-stakes machines were found to be triggering problem gambling.

"I'm concerned about the longer-term impact of the growing popularity of FOBTs (fixed-odds betting terminals) and have asked the Gambling Commission to give particular priority to work on the risks associated with high-stakes machines," Sutcliffe said.

"We have always said if any evidence emerges that they (FOBTs) are causing harm, then we are prepared to take action and we have the power to take action."

FOBTs are highly profitable for UK bookmakers, and any tightening in laws surrounding them would be a blow to firms with high street betting shops.

Ladbrokes (LAD) is the latest gaming company to join in the takeover speculation fun and games. That puts William Hill and Ladbrokes in the spotlight. The shares have performed well on the back of this.

Given Ladbrokes iconic status on the UK high street we have added them to our affiliate testing group to see whether Ladbrokes canperform across the board given the oft cited criticism of William Hill and Ladbrokes is the poor online performance and provision. So far, so impressive. Ladbrokes has a large range of products and creatives.

I particularly like the Ladbrokes UK Pub Slots play area. That should do well.




Joe Lewis is an astute investor who believes that LAD is undervalued. This may be a cover for a proposed takeover by a private equity firm however.



This article from the Times covers the story.

Billionaire Joe Lewis quietly builds stake in Ladbrokes [Times]

Joe Lewis, the Bahamas-based British billionaire, is the mystery buyer behind a near-7 per cent stake in Ladbrokes, the UK's biggest bookmaker, The Times has learnt.

Speculation has swirled in recent weeks as to the identity of the buyer after Citigroup disclosed in a series of statements that it was holding shares as “contracts for difference” on behalf of one of its clients.

It is understood that Mr Lewis believes Ladbrokes shares are undervalued and he is thought to be keen to acquire more blocks if and when they become available.

Here is the meat of the article - this is what I suspect will come to pass:

Any bid could also involve a tie-up with Apax Partners, the British private equity group, which is known to have approached Ladbrokes in 2006 when it was demerged from Hilton Group.

Mr Lewis, who is involved with Betdaq, the betting exchange, has recently been linked to stake-building at Rank Group, the embattled casino and bingo club operator.

Analysts believe that, in the event of a bid for Ladbrokes, he may consider turning his sights on Rank with a view to merging the two companies and creating a gambling conglomerate to rival Gala Coral.

A spokesman for Ladbrokes declined to comment. Shares of Ladbrokes fell 1p to 327.5p, valuing the group at just under £2 billion, or almost £3 billion including debt.

I will shortly be reviewing the new Ladbrokes 3D poker offering as it uses the software developed by an AIM small cap - Pokerwize (PLW).

The 888.com trading statement seems to have caught the interest of the financial pages of the mainstream press. Nothing like FTSE 250 entry to spark a little interest. With the growth in online Bingo 888 remain well positioned.

We covered the trading statement here:

888 trading statement 12/2/2008: revenues up 35% and trading well

The FT and others also weigh in with some insightful comments:

888 gains from US online ban [FT]

888 Holdings is a far better company for having had to abandon the US online gambling market, its chief executive said as it reported fourth-quarter results beyond market expectations.

Gig Levy said on Tuesday 888 had “closed the circle” following the US clampdown on online gambling in October 2006, which forced the entire listed sector to withdraw to Europe and other markets and launch new gaming products such as bingo.

The FT's final comment is:

FT Comment

An outlook including a new sports betting site, plus more strategic partnerships, new casino games and technological upgrades demonstrate a company moving beyond post-US recovery mode.

Bingo is showing strong growth, and the regulatory outlook across Europe will evolve in the sector’s favour.

A forward p/e of about 15 times may be at a premium to peers, but few analysts would bet against it increasing its value.

The FT on the Ladbrokes proposed takeover.

It is increasingly clear to me that the bricks and motar businesses of William Hill and Ladbrokes are simply too slow and technically feeble. They are stuck in the old world and will eventually be snapped up on the cheap. I would avoid - the management is simply tooold fashioned - they need new blood and new advisors. Both have failed to gain a tractale online presence.

A year ago, 888 Holdings was in talks with Ladbrokes about a merger, as the Israeli brothers who founded the business accepted that the US clampdown on online gaming would force them to exit much earlier than expected, writes Roger Blitz.

One can presume that Aharon and Avi Shaked and Ron and Shay Ben-Yitzhak are now mightily relieved that the merger bit the dust, amid Ladbrokes’ legal concerns over liabilities that 888 potentially held in the US.

Ladbrokes originally viewed the fallout of the sector’s eviction from the US as an opportunity to break into the online territory it had hitherto largely ignored.

888, along with its peers in the sector, appeared vulnerable as they suffered dramatic share price falls and downgrades by analysts. By the time the proposed deal was revealed, 888 was struggling to maintain its share price above 100p, well below its mid-2006 peak of 253p. Ladbrokes was trading at about 410p.

On Tuesday, 888 was basking in some analysts’ share price targets above 170p while Ladbrokes’ price was only just rising above 300p. The deal price of the merger would have been about 140p.

A close escape for 888.com in my opinion. Even so,a forward PE of 15 is demanding.

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A good article relevant to owners of Probability (PBTY) share holders and others including the big boys of Ladbrokes, William Hill, Paddy Power etc.

Whilst PBTY have had a good run it is clear that the face a highly competitive environment with the established brands having a significant marketing advantage.
However, the are making the correct moves with some of their product tie-ups.

Warning bells ring as betting goes mobile [Guardian]

Any time, any place, anywhere is the gambling industry's idea of paradise. To have punters placing bets, even if they are miles from the nearest laptop or high street bookie, is their ultimate fantasy. Thanks to rapid advances in mobile phone technology, that dream is now coming true.

An industry report by leading authority Global Betting and Gaming Consultants last week revealed that revenue from punters betting on their handsets is growing by 29 per cent a year and is set to continue into the foreseeable future.

Though accounting for less than 1 per cent of total gambling revenue, mobiles are the fastest-growing platform for the likes of Ladbrokes, BetFred, Bet365 and National Lottery provider Camelot.

Britain's biggest gambling firms are launching new games virtually every week. The latest is Ladbrokes, which is releasing Deal or No Deal, based on Endemol's TV gameshow, specifically for the mobile. This week also sees the launch of its first 3D slot-machine game, Pub Fruity.

'We're going like the clappers,' said a Camelot spokesman. In three years, the Lottery operator has secured three million interactive users, with mobile phone players growing in number.

'It is only now the potential of mobile is beginning to be realised,' said Ciaran O'Brien at Ladbrokes. 'The challenge is to raise awareness of our offerings.'

Until now, gaming firms have found it hard to take advantage of mobile phone use. The size of the screen was too small and punters had to download special software, while most handsets did not have the processors to handle huge quantities of information.

But the successful launch of Apple's iPhone, and the growing take-up of Blackberries and other advanced handsets, has changed that. And business models successfully trialled in South Korea and Hong Kong are now being adopted in the UK. Gambling giants have raced to sign alliances with small technology firms from all over the world.

Warwick Bartlett, lead partner at Global Betting & Gaming Consultants, said: 'The area where it's going to be big is sports betting.' Experts predict Premiership football clubs will soon form alliances with mobile phone and gambling firms to text supporters, asking if they want to bet on matches in real time.

Ladbrokes has offered mobile-phone betting for seven years. The firm says 25 per cent of bets placed on mobiles are taken during a sports event.

But there are problems. The industry has difficulties ensuring the correct version of games, with the right settings, are delivered to each handset. This is not easy because there are so many handsets on the market. 'Mobile users are concerned that accessing the mobile internet will lead to expensive data charges,' explained O'Brien. 'But the network operators are quickly realising the revenue potential from accessing mobile internet content is significant and are introducing more user-friendly data tariffs.'

Martin Higginson, the entrepreneur who founded controversial ringtone firm Monster Mob, is now chairman of NetPlay TV - a quoted interactive gaming firm that is growing rapidly. Last summer, it launched its first Mobile gaming product, Quids In. Today it has more than 50,000 regular players generating in excess of £200,000 a month. He says mobile-phone gambling will become 'a serious proposition' from next year. Today, he says, just 20 per cent of Britons have the necessary third-generation mobile phones.

NetPlay is currently licensed in the UK, unlike most inter-active gambling firms, which are based in offshore locations, such as Gibraltar, to avoid tax. Soon NetPlay will follow them. It admitted in a recent trading statement that it is looking to go offshore to boost profits.

As mobile-phone betting increases, questions inevitably will arise about checks made on players to ensure they are over 18 and that problem gamblers are rooted out. Camelot stresses that it is a socially responsible operator and that the barrier to entry is high, with players having identity and credit checks. Camelot uses Experian to verify players' creditworthiness.

But the move has provoked concern from gambling addiction groups that increasing prevalence of betting will generate serious social problems.

An ex-gambler, attached to Gamblers Anonymous, said: 'When fruit machines arrived in the Sixties it took a long while before it became clear that they were producing addicts. It's the same online.'

Professor Mark Griffiths, gambling expert at Nottingham Trent University, said: 'With remote gambling, it's going to be problematic to establish whether players are intoxicated or under age.'

In a recent wide-ranging Gambling Prevalence study it was found that 1.3 per cent of the punters were problem gamblers, once National Lottery players were stripped out of the figures. The most vulnerable groups were among black and Asian punters, those who were separated or divorced, and people with few educational qualifications. The forms of gambling causing the biggest problems were spread betting, fixed-odds betting terminals and betting exchanges - all recent gambling innovations born out of technological advances.

Cue the mobile phone.

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Ladbrokes continue to aquire land based bookmaker operations, this time in Northern Ireland.

Eastwood bookmakers are NI's largerst bookmaker with 54 shops and sold for a cool £117 million. That is some serious cash per shop.

This is clearly a good deal for all concerned even if it does represent the march of the multinational against the small independents.

This deal will have little impact on LAD's share price but it might give us some indication of the value of betting shops. Consider Leisure and Gaming's 48 possible shops in Italy. How much would they be worth? Given LNG's market cap is less that 6 million Euro it is possible to see considerable upside.

LADBROKES PLC ACQUIRES EASTWOOD BOOKMAKERS [ADVFN]

Ladbrokes plc has acquired Eastwood Bookmakers, Northern Ireland's largest
bookmaker, for a consideration of £117.5 million. The acquisition is expected
to generate EBITDA of approximately £11 million in the first 12 months of
Ladbrokes' ownership, with good growth forecast for the next 2 years as
rebranding takes effect.

Following today's acquisition of the 54 Eastwood shops, Ladbrokes will have 70
shops throughout Northern Ireland, which include the 16 shops it acquired in
2006 from Northwest Bookmakers. Ladbrokes' market share represents 23% of the
total number of betting shops in Northern Ireland, where strict application of
the demand test criteria has kept betting shop numbers relatively stable for
many years. Unlike the rest of the UK the demand test criteria for betting shop
licences still applies in Northern Ireland.

Ladbrokes is already the largest bookmaker in the Republic of Ireland where it
operates 201 shops. In total Ladbrokes now operates 271 shops throughout
Ireland.

BJ Eastwood and Frances Eastwood established Eastwood Bookmakers in the 1950s
and developed the business to become Northern Ireland's best-known family
bookmaker. Of the acquired shops, 30 are located in and around Belfast with the
remaining shops spread throughout Northern Ireland. The acquisition also
includes Eastwood telephone betting business.

Commenting on the acquisition, Alan Ross, Managing Director Ladbrokes European
Retail said:

"Today's acquisition of Eastwood establishes Ladbrokes as the biggest bookmaker
in Northern Ireland. We bought our first shops in Northern Ireland in 2006 and
our 16 shops have performed exceptionally well as customers respond to the wider
product range, increased opening hours and refurbishments. We aim to repeat
this success with Eastwood in the coming years."

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A number of quoted companies are trying to crack the Italian market in light of a recent loosening of the regulatory framework, in part, as a result of EU legislation.

Simon Banks has written a neat little summary. William Hill, Ladbrokes and Gala are all interested in Italy and with the opening up of betting shops. One small company already there is Leisure and Gaming (LNG) although they are making heavy weather of it so far with a market cap less that 6 million EURO.

The process in Italy is worth reading about as it might be a model for other EU countries. e.g. Germany.

Any shareholders in LNG should also read this and the conclusions are as follows:

1. Competition is fierce.

2. Red tape is everywhere.

3. LNG are very small and likely to remain so unless they can "do a deal".

888.com also get a mention as a new entrant.

ITALY — CONTINENTAL GAMING'S NEWEST FRONTIER [IGWB]

In 2002, an agent for the British sports betting firm Stanley Leisure, Piergiorgio Gambelli, was arrested and charged by the Italian police for breaching a law which prohibited non-Italy licensed companies from accepting bets from Italian residents. Stanley appealed to the ECJ, which ruled that the law was contrary to the Treaty of Rome and that a state monopoly could only be protected if it was in the public interest.

In 2004, Italian sports bookmaker Massimiliano Placanica, who was licensed by the state regulator the Amministrazione Autonoma Monopoli di Stato (AAMS), was arrested and charged with violating a law that prohibited licensees from conducting business with overseas bookmakers who were listed on a stock exchange. Placanica used Stanley Leisure to manage his liabilities and it was Stanley who again appealed to the ECJ and in early 2007 the court ruled that the Italian restriction was unlawful.

So in the light of the Gambelli and Placanica cases, the government has started the process of awarding 17,000 gambling licenses to both domestic and international operators. The licenses are available for betting shops and kiosks, slots arcades, bingo halls and online gambling. As yet there is no word about increasing the number of casinos in the country from the current four, although there is talk of allowing regional governments to issue local casino licenses.


Loosened strings

Gambling in Italy has been regulated by the AAMS, which also managed the state lottery and the state-owned tobacco brand MS. It is a measure of how much the regulatory climate has changed that the finance ministry has recently announced a name change, restructuring and rebranding of the body. The AAMS will in future be known as Agenzia Giochi and the ministry is inviting tenders from consultants to assist it with the creation of a new operating structure and image.

The AAMS' control of gambling was highly interventionist, to the extent that every wager had to be passed through a central government controlled database for tax and money laundering monitoring purposes. Additionally, the AAMS produced the palinsesto, a list of sports and bets that were permitted under law. The result was that there was little differentiation between licensed betting companies' offerings.

Innsbruck-based Goldbet has been operating in Italy for three years with an .it URL address. Online operators who were licensed by the AAMS were only permitted to use .it sites with all .com betting sites blocked by Italian ISPs. "It was hard to differentiate ourselves with the .it site as everyone was offering the same bets. We're hoping we will be able to offer our full product offering on the .com site, when it is authorized." Goldbet's Thomas Smallwood told IGWB.

Smallwood welcomes the liberalization of the Italian market. "Although there will obviously be increased competition we believe that because we are already known in the country we will be able to significantly increase our business. We have already run advertising and marketing campaigns so our brand is out there. New entrants will have start from scratch."

One such new entrant is www.888.com. The company has just launched an Italian sports book, in partnership with Italian gambling software company Cogetech, after gaining a license. The company does not have a horserace betting license and will not be offering its casino and poker products to the Italian market, although it is monitoring the regulatory situation closely. There is a feeling that Italy will classify poker as a game of skill but that it will only allow peer-to-peer playing online.


Opportunities on land

While the Italian online gambling market undoubtedly has potential, it is the land-based opportunities that have attracted the interest of Europe's biggest gaming companies. For example, the United Kingdom's big three bookmakers Gala Coral, Ladbrokes and William Hill have all recently been awarded licenses.

Formed by a group of expatriate Italian businessmen in the UK in the early 1990s, Eurobet started life offering sports bets to Italians via the telephone and later over the Internet. It was later acquired by Coral bookmakers, which itself was acquired by Gala group. Earlier this year Eurobet was awarded 358 licenses to operate sports betting outlets and 45 for horseracing and is therefore set to become Italy's largest operator.

Interestingly, Nico Giovando, one of the founders of Eurobet who runs the company's operations in Italy, sees the prospect of longer term profits not from bookmaking but from gaming. "In my opinion there is still great potential for growth in the Italian betting market, not to mention the gaming market which has still to be launched, and which will be even greater than that of the sports and horseracing market," Giovando said.

It is notable that of the big three UK operators, Gala Coral that is only one that has casinos in its portfolio.

UK-based retail sports betting giant William Hill has partnered Spanish multinational gambling company Cordere to gain a foothold in the Italian market. The joint venture has been awarded 20 concessions to operate horseracing betting shops, seven concessions to operate sports betting shops and 28 concessions to operate betting corners in bars, cafés and shops.

Hills' UK rival Ladbrokes is also entering the Italian market via a joint venture and has paid €1.3 million for a 51 percent stake in a new company with Pianeta Scommesse to provide technical services to the country's 770 betting shops. Although the venture may appear quite modest, Ladbrokes is very much viewing the move as a way to gain a toe hold in the market.

"With the process of liberalization of the market now under way we believe Italy offers significant potential for the world's biggest betting brand," said Ladbrokes' Chief Executive Chris Bell. "The proposed new licensing framework will see an expansion of the market and the combination of Ladbrokes' expertise in marketing, technology and operations and Pianeta Scommesse's local knowledge will be well placed to benefit from the reforms."

Ladbrokes' has actually allocated €100 million for investment in the Italian market and will no doubt be looking to operate some of the 1,400 new betting shops that are going to be licensed. To put that figure into context, there are currently 770 betting shops in Italy, compared with over 8,000 in the UK, of which Ladbrokes owns around 2,150, so although there is obviously potential in Italy, the market will still be considerably smaller than in the UK.


Local understanding

What is interesting about the three companies cited above is that all are using local partners; Gala Goral having acquired one and Ladbrokes and William Hill forming partnerships. Other smaller companies are also using consultants with knowledge of the local market.

One such consultant is Graham Wood, director of iGaming Consultancy Limited. Wood advised Ladbrokes on the Pianeta Scommesse deal and told IGWB that local knowledge is key to cracking the Italian market. "The Italian authorities have indeed opened up the market to non-Italian operators, but have made the process of obtaining Italian licenses extremely difficult for non-Italians," he said. "The tender documents were all in Italian and the communication protocols with AAMS, which are unique in the world, required the services of Italian software specialists."

The fact that William Hill was only awarded 55 concessions while Eurobet, with its Italian management, were awarded 403 highlights how Italian operators are favored over foreign ones, Wood added. "In Italy it is still very much a case of 'it's not what you know but who you know,' although many foreign operators underestimated how much to bid for the licenses."

Apart from the opportunities afforded by liberalization, there is another reason why Italy appeals as a new market: the betting habits of Italians. As in Spain and most other countries that have been starved of legal sports betting, Italian gamblers adopt the "small stakes for a big return" attitude of lottery gamblers. Meanwhile, in the deregulated British market where there is a tradition of sports betting going back for nearly 300 years, punters have become acutely aware of the concept of value and tend to bet with high stakes but for relatively small, regular returns.

"When you have a market that is used to having to predict the result of 13 different football matches in order to win, offering them the chance to predict just six or seven matches appears to massively increase the chance of winning," Wood said.

This mindset is good news for operator margins, according to Smallwood. "There has been little competition on odds and serious high-stakes punters usually bet either offshore or illegally, so the small- stakes punter isn't really value aware," he said. "How long that will last we don't know but I should imagine that it will take a while for the average Italian punter to reach the same level of sophistication as his English counterpart."

With a relaxation of the regulatory regime thanks to pressure from Brussels, the Italian market would appear ripe for exploitation. However, an understanding of the Italian market and sports betting culture will be crucial for any operator seeking to take advantage of developments. While European operators, with their sports betting expertise, are leading the first wave of new entrants to the Italian market, it will probably be casino companies that will profit in the long term if, as expected, Italy eventually opens up its gaming market as it has its wagering market.

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Ladbrokes has called off plans to build and operate land Casinos in the UK. It is interesting to note that they are making this decision on sound economics.

Basically LAD do not see that they can make sufficient return on capital given the investment required. i.e. It will take too long to pay back the cost of building and operating the Casino and there is probably a more profitable way to spend millions and millions of pounds.


Ladbrokes ends casino plans[Go-Bingo]

Ladbrokes, the leading UK bookmaker, has ditched plans to break into the UK casino market in a blow for government plans to issue 16 new casino licences to local authorities.

James Purnell, culture secretary, is expected to announce in the next few weeks the formal burial of the proposed super-casino in Manchester. But he will give the go-ahead for the eight large and eight small casinos that remain from the wreckage of the government's much-derided casino expansion policy.

Ladbrokes, however, will not be among the bidders to run them. "We have conducted a review of our casino strategy and have decided to withdraw from the process due to the length of time it would take to generate sufficient return on the capital spend required," it said.

Ladbrokes' decision raises doubts about whether any of the leading gaming operators will bid for the casinos. The increase in casino duty in last year's budget, the smoking ban and the removal of lucrative gaming machines, as required under the Gaming Act, have left casino operators nursing damaged businesses.

Though much smaller than the defunctsupercasino, the licences for the 16 new venues attracteda flurry of bids from local authorities because of the potential for economic regeneration.

But the prospect of not even these casinos getting off the ground would be the final humiliation for a policy that envisaged 40 supercasinos in the UK. The plan was embroiled in controversy over alleged ministerial links to US operators and prompted a morality backlash.

Ladbrokes had in recent years worked on a strategy for getting back into casinos.

Two years ago, it opened a casino in the Paddington Hilton hotel and was not only behind Blackpool's failed bid for the supercasino but was laying out plans to bid for eight of the new casino licences. Its decision to abandon the strategy effectively kills off talk of Ladbrokes as a suitor for Rank Group, the embattled casino and bingo operator that has seen revenues plunge.

Gala Coral, which has 30 casinos, 26 of which it bought from Ladbrokes in 2000, and a market share of 24 per cent, said it was "keeping our options open" about bidding for any of the16 casinos.

The UK bingo market was shaken up in 2006 when Harrah's, the Las Vegas-based gaming operator, paid £279m for London Clubs International, swiftly followed by Genting, the Malaysian gaming operator, buying Stanley Leisure.

A 888 director today informed the market that he has sold over 3/4 of his shares 144,000 at £1.44 each bringing Mr John Anderson a cool £2,016,000.

The share price has been performing well recently against falls across the sector especially for the high street bookies but also for others such as Sportingbet and PartyGaming.

Is this sale for personal reasons or is it the beginning of a fall for 888 shares. Tempting to take out a short on this news although there is the possibility of some corporate action in the background. Who knows - the buyer of Mr Anderson's shares might be stake building.

888 Director/PDMR Shareholding [ADVFN]

888 Holdings plc (the "Company") has been notified by Mr John Anderson that on 8
January 2008 he sold 1,400,000 ordinary shares of 0.005 pence each of the
Company ("Shares") at 144p per Share.

Following the sale, Mr Anderson has interests in 588,869 Shares.

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Below are some links to the recent Ladbrokes deal and some background information on Alphameric (ALM).

The more one reads the more it appears that Ladbrokes has been done over and may explain some of its recent fall in share price (not surprisingly really).

Turf TV signs up Ladbrokes [Guardian]

Turf TV has yet to strike a deal with William Hill or Betfred. Without a Turf TV deal, bookmakers will be unable to show pictures from just over half of Britain's 59 racecourses. Courses that switched yesterday include Ascot, Cheltenham, Newmarket, Aintree, Epsom and Sandown.

Turf TV poised to win broadcasting battle [Guardian]

A band of 31 racecourses are on the brink of winning a bitter media rights battle with Britain's largest bookmakers, seizing control of live race broadcasting to betting shops.

The brinkmanship over TurfTV had threatened to destroy technology group Alphameric, contributing to profits warnings in June and September. The decision to get involved in TurfTV had been a bold one, given that the majority of Alphameric's core business is in the supply of technology to the major bookmakers.

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Ladbrokes (LAD) eventually caved in and signed up to Alphameric's (ALM) Turf TV offering. This represents a considerable defeat for LAD that will add considerably to the fixed costs of each shop (possibly £6500 per shop per year).

ALM is another share to watch in the broader gaming sector and has been added to our financial section on the far right column as a possible share to invest in. We will now maintain news tracking on this blog.

This deal is an excellent one for them although the share price reaction was muted although it is still considerably up off its lows.

Alphameric says agrees Turf TV deal with Ladbrokes [ADVFN]

LONDON (Thomson Financial) - Turf TV, the racing television service owned by
Alphameric and 31 UK racecourses, said it has signed a contract with high-street
bookmaker Ladbrokes to show Turf TV in all of Ladbrokes' betting offices.
The contract, which runs for five years, brings to more than 6000 the number
of licensed betting offices contracted for Turf TV's full service, the company
said.
Bookmakers had resisted signing up to Turf because they wanted to run their
own system, called Satellite Information Services (SIS), which has a contract
with the UK's remaining 28 courses, the Financial Times reported today.
"I am delighted that Ladbrokes has decided to come on board and welcome them
to Turf TV," said Alphameric's chief executive Alan Morcombe. "Within a year of
launching the business, Turf TV has now signed up a good majority of the
Licensed Betting Offices in Great Britain and Ireland."
The newspaper reported that Ladbrokes had agreed to pay 6,500 stg for each
of its 2,200 betting shops to use the service. The company declined to confirm
the value of the deal.

In a remarkable day for microcap Pokerwise (PLW) their share price rocketed up 130% (at time of writing) on news that Ladbrokes has launched its 3D product.

Given we know nothing of revenues (although it is an upfront fee and revenue sharing deal) such enthusiasm is frankly astonishing. LAD is only a small player in the competitive online poker market and while this will help differentiate their product offering it is unlikelty to mean a step change in the fortunes of either PLW or LAD.

What PLW need is additional sales to other microgaming poker rooms given that their stand alone offering brings in such small revenues and no where enough sufficient to cover costs.

It will be interesting to see where the share price is in two weeks time. If it is higher that todays's peak I will be mightly surprised.

To check out the PLW 3D offering click on the banner in the sidebar of click here:



Opinions welcome.

Playwize Product Launch[RNS]

LADBROKES 3-D POKER LAUNCHES WITH PLAYWIZE TECHNOLOGY

The Board of Playwize, the AIM quoted developer of software for the
entertainment industry, is pleased to announce that Ladbrokes International Ltd.
("Ladbrokes") launches Ladbrokes 3-D Poker this week, which features Playwize's
innovative video gaming technology for the most realistic and immersive poker
experience on the internet. Ladbrokes is a wholly owned subsidiary of Ladbrokes
plc, a world-leading provider of interactive betting and gaming services, and
the biggest retail bookmaker in the UK and Ireland.

Ladbrokes 3-D Poker incorporates Playwize's exclusive technology, including
real-time statistical calculators, interactive tutorial and live voice chat.
Pursuant to a Development and Licensing Agreement, Playwize has licensed its
technology for two-years in exchange for an up-front payment to the Company and
as well as ongoing licensing fees in the form of a revenue sharing arrangement
with Ladbrokes.

Foo Katan, Chief Executive of Playwize said: "The launch of Ladbrokes 3-D Poker
represents another milestone in the Company's strategy of developing and
licensing its online 3-D poker technology to third-party poker rooms. The
Company anticipates announcing other such licensing agreements with some of the
many poker room clients on the Microgaming Network in due course."

Ladbrokes eGaming Managing Director, John O'Reilly commented: "This is a major
step in the convergence of video gaming technology and online gaming and we're
pleased to be the first leading poker site to go 'virtual'"

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LAD released a 4 month tradin gupdate today. This provides a first insight into the costs of television advertising (at a cost of £4.7 million).

It appears that LAD was saved by the high rollers.

Ladbrokes 4 month trading update [RNS]

Profit* for the four months ended 31 October 2007 increased by 84% reflecting
continued contribution from Telephone High Rollers, which significantly offset a
below target performance in the UK Retail business. Profit* excluding High
Rollers and the cost of our recent TV advertising campaign** decreased by 12%.

Total gross win increased by 33% including High Rollers (up 7% excluding High
Rollers).

UK Retail gross win increased by 4%:

Ladbrokes 4 mths to end Oct profits boosted by high roller activity UPDATE


Of interest to LNG shareholers are the following:

While football comparatives were tough in July due to last year's
World Cup, amounts staked on football since the start of the 2007/2008 season
were significantly higher than last year. However the margin was poor due to
unfavourable results.

In Italy, 17 shops have been acquired and are now trading satisfactorily and the
Italian management team are active in the rollout of new licences. We expect our
Italian local language website to launch shortly.

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Lehman Brotehrs has started coverage of Ladbrokes and William Hill. The more coverage the better and a bullish start.

William Hills has been on a concerted share-buy back spree recently.

-------------------------------

Lehman likes Ladbrokes

Lehman Brothers has initiated coverage on Ladbrokes with 'overweight' and a target price of 475p.

The broker also started William Hill as 'underweight' with a 700p target.

In a note to clients, Lehman said of the two betting companies, it believes Ladbrokes has more attractive short-term prospects than William Hill, owing to its higher number of amusement with prizes (AWP) machines, cost reduction in the retail network, more advanced international expansion and better technology in the interactive business.

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Sportech has had their deal with Vernons Pools waved through as expected. With the amount of competition in the gaming sector it was never going to be a problem. What will be a problem is getting the next generation of players to want to gamble on the pools when there are so many alternatives.

Sportech Statement re CC findings

Sportech PLC (the "Company"), the UK's leading football gaming business, notes
the announcement that the Company's proposed acquisition of Vernons Football
Pools has been cleared by the Competition Commission. The Competition
Commission, which published its final decision earlier today, has confirmed that
the proposed acquisition will not lead to a substantial lessening of
competition.

The Company will now seek to conclude its discussions with Ladbrokes PLC (the
owners of Vernons) and a further announcement will be made in due course.

Ian Penrose, Chief Executive, said

"We are delighted that at the end of this lengthy and detailed process, we have
received clearance from the Competition Commission to proceed with the
acquisition of Vernons. We will now look to conclude our negotiations with
Ladbrokes."

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I have now added GB group to the list of companies covered in NetBetBlog.

GB Group are a data information company. Their main offering is electronic ID checks.

The main offerings are:

* DataAuthentication helps businesses validate personal identity
information and provides anti-fraud solutions to fight crime.

* DataIntegrity helps companies capture and maintain accurate customer
contact data, an essential foundation for any profitable customer
relationship.

* DataSolutions empowers companies to consolidate and analyse customer
data from various sources, enabling them to make better, more informed
decisions.

Today GB group announced the signing of contracts with Ladbrokes and Hills meaning that GB Group have not got the top ten online gaming companies as clients. GB group's share price has performed poorly in recent months - this may be a turning point. I suspect that the fall out from the financial sector is the cause of the fall as this was a large target market for GB Group.

GB Client Agreements

1st October 2007

GB GROUP PLC
("GB" or the "Group")

Further Client Agreements in Online Gaming and Mobile Telecommunications Sectors

GB today announces that Ladbrokes and William Hill have become clients of its
electronic verification solutions - URU and ID3-Check. The addition of these two
leading gaming operators to GB's client base means that GB now provides
electronic verification solutions to all of the top ten Online gaming businesses
globally as defined by the Power 50 index of Online Gaming companies (Note 1).

Additionally, in the Telecoms sector, Blyk (www.blyk.com) has announced that it
has selected GB's (www.gb.co.uk/news/blyk) URU and ID3-Check as its chosen age
and identity verification solutions for its revolutionary new service, the first
ad-funded mobile network in Europe which links young people up with brands they
like and gives free text messages and minutes every month.

Richard Law, GB's Chief Executive, commented:

"These recent business successes for GB's electronic age and identity solutions
in both the Online Gaming and Telecoms sectors increase our leading position in
these markets. More importantly, they illustrate the continued move by
organisations away from paper-based methods of verification to more efficient
and effective electronic solutions. This is evident across all sectors including
Financial Services."

Note 1: The Power 50 (2007) index of Online Gaming Operators is an index of the
leading global Online Gaming companies. The index is compiled annually and
published by eGaming review (www.egrmagazine.com), a leading publication for the
Online Gaming industry.