There is consolidation in the gaming industry and that is creating heightened interest in the sector. Bookmakers William Hill and Ladbrokes report quarterly earnings this week, both of which are in the midst of possible tie-ups.
A deal between Ladbrokes and Gala Coral looks set to get passed by regulators on condition that 350-400 shops are sold to reduce competition concerns. William Hill is the subject of an unconfirmed takeover joint bid from 888 holdings and Rank Group.
Away from the reporting this week, Paddy Power Betfair is up and running after the merger of Paddy Power and Betfair, whilst GVC Holdings completed its acquisition of Bwin.Party earlier this year.
Traditional gambling companies have been squeezed by heightened competition from online rivals, higher taxes and increased government regulation. The response has been to join forces to take market share and lower the huge marketing expense per customer.
The door is still wide open to further consolidation with still so many firms gambling firms competing for business. Betway, Bet365, Unibet, BetFred, Stan James and 32Red to name a few, are well known betting brands which have not yet merged.
The devaluation of the British pound after the Brexit vote increases the odds of foreign interest in a UK gambling industry target. Betsson, the largest Swedish online gambling company, which acquired Betsafe in 2011 and also Playtech, a gambling software provider based in the Isle of Man are possible acquirers.
Ladbrokes is expected to earn 2.7p per share on revenue of 628.5m in the first half of 2016. William Hill is expected to have an EPS of 11.1p on revenue of 806.0m for H1 2016.
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