Ladbrokes Denies Seeking Acquisition of Betdaq - 01-12-12

January 12 - Following intensified speculation that it is seeking to purchase the global betting exchange, Betdaq, Ladbrokes sports betting group has strongly denied these acquisition rumors.

Instead, a Ladbrokes spokesman said that the two companies were only discussing "technology supply."

The deal with Betdaq would see Ladbrokes "buy in pricing and trading skills of a peer-to-peer betting exchange - long seen as a main rival to traditional bookmakers," according to The Telegraph.

The talks are currently between Ladbrokes and the Irish billionaire Dermot Desmond who is the owner of Betdaq and a 2% owner of Ladbrokes.

Betdaq was formed in 2000 although it struggles to compete against bigger rivals such as Betfair which has an enormous market share.

The embattled Chief Executive Officer of Ladbrokes, Richard Glynn has already four failed online gambling acquisition negotiations to his name and is said to be desperate to see a deal through to the end.

Since he took over as CE of Ladbrokes in 2010, Glynn has seen failed talks with 888 Holdings and Sportingbet, pulled out of an auction to purchase the Australian Centrebet and halted talks between this company and Playtech.

But although Ladbrokes has set aside £50 million to invest in online gambling, the spokesman for Ladbrokes has denied acquisition of Betdaq. "It's only a discussion about technology supply. Exchanges have good up to the minute pricing technology," he said.

Betdaq is the trading name of the Irish based Global Betting Exchange and started trading in 2001. The group employs 100 people and handles bets worth £50 million each week. The group's site operates separate UK and international versions.

Ladbrokes Relies on Bookie Business

Despite the growing internet gambling market, Ladbrokes still relies heavily on revenue from its bookie shops and analysts recently pointed out that retail accounts for 75% of Ladbrokes' earnings (before interest and tax). Unfortunately, with the recession hitting these shops, the group has realized that it cannot rely solely on this sector and therefore needs to expand online.

In comparison, in 2011, 80% of rival, Paddy Power's revenues came from its online business.

Morgan Stanley, market analysts ranked both Paddy Power and Ladbrokes shares as 'underweight' due, in part, to the fact that the British government is likely to impose heavy taxes on internet gambling in March this year.  The Irish administration is planning to do the same in 2012.