With the passage of U.S. legislation that prohibits U.S. banks and credit card companies from processing transactions between U.S. residents and online gambling companies, many major online gambling groups have been dealt a serious, perhaps lethal, blow. Some of these same online gambling groups are now potential takeover targets of two of the largest gambling groups in the world, America’s MGM Mirage and Britain’s Ladbrokes. There are reports that both MGM Mirage and Ladbrokes have contacted a number of online gambling groups concerning takeover deals, with MGM, the world’s second largest gambling group, contacting several other groups including poker market leader, PartyPoker. Bankers involved with MGM have confirmed the reports, stressing that MGM is indeed serious about possible takeovers especially if the takeover is for any group created by a merger between PartyGamin and 888.com, which are reported to be in negotiations along with Sportingbet. Confirming the merger reports, 888.com recently issued a statement to the London Stock Exchange admitting it had been “very active” and was talking to “more than one party”. There are also reports that Ladbrokes is one of the parties involved in these talks, although, thus far, Ladbrokes has been unwilling to comment on the situation other than to say they are following events closely. Ladbrokes has a popular online casino and poker site but, compared to the company’s sports betting section, they are a relatively insignificant part of the business. Ladbrokes has been vocal, however, about their interest in gaining a greater foothold in the European and Asian markets. 888.com, on the other hand, has nothing in the way of sports betting, but has a lot to offer when it comes to the Asian markets, as their product was particularly designed for that market segment. Prior to the new U.S. legislation, 888.com derived approximately half of its revenues and profits from the U.S., but has since been concentrating on developing its brand in other territories. In 888.com’s last financial announcement back in September, before the anti-online gambling legislation was passed, net gaming revenues were reported to have grown by 61% in the UK and by 16% in continental Europe. “The truth is that everybody is talking to everybody else,” said one source involved in discussions. “These things are at an early stage – the US situation only developed a few weeks ago.” In contrast to Ladbrokes, Gala Coral and William Hill, two of Ladbrokes biggest competitors, have not expressed any interest in acquiring any of their online rivals. Gala Coral is, however, considering a takeover of Tote, the state-owned pool betting business, while David Harding, William Hill’s chief executive, said the company has ruled out such possibilities. Posted on: November 12, 2006
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