It does appear that many long established land based gambling companies are finding it hard to compete with the next generation of online based gambling companies.
The much lower overhands involved with running any type of online gambling related site when compared with their land based counterparts, does of course mean their bottom line profit is often way higher, and they have more cash to invest in ongoing projects, or to payout as dividends to their share holders.
It wasn’t that long ago that Ladbrokes merged operations with Coral, both of them being long established and very well know high street bookmakers, both also with an online presence too.
However, with the huge cash reserves of some online gaming companies, who are eager to swallow up others, the new Ladbrokes-Coral company were always going to be sitting ducks for an online gambling company looking to expand.
That is what has happened, for one of the biggest companies in the online gambling environment, that being GVC Holdings has just bought out Ladbrokes-Coral.
You may not have heard of GVC Holdings before, however you will have heard of some of their online gambling sites.
They operate Foxy Bingo, Party Poker, Bwin and Sportingbet to name just a few of their gambling sites, and those are some of the biggest and best known gambling related sites, offering their customers everything from sports betting opportunities, to casino, bingo and poker games.
Deal worth up to £4billion
One very interesting aspect of this deal is that it has a cost to GVC Holdings that will value Ladbrokes-Coral of somewhere between £3.2billion and £4billion, that cost is not yet going to be known, due to a rather unique set of circumstances.
The UK Government is currently looking into FOBT’s which are Fixed Odds Betting Terminals of which each betting shop is allowed four of them. They are shortly to make a ruling on whether the maximum stakes of those machines should be lowered from the current maximum of £100 per game played.
FOBT’s are the lifeblood of land based betting shops in the UK for they offer a range of casino styled games including Blackjack, Roulette and slot machines, and make huge profits each year for bookmakers.
However, due to their popularity and the fact many people have been experiencing gambling related problems when playing them the UK Government may or may not decide to lower the maximum stake per game played, which could drop down to as low as £2 per game instead of the current £100 per game.
It will be the outcome of that review of FOBT’s that will determine whether GVC Holdings are going to pay the lower end of the figures mentioned above, or end up paying the higher end figure. There is no way of prejudging the outcome of that review of FOBT’s though, for the huge amount of tax they collectively bring in may sway the UK Government into deciding that no change is required in regards to the stakes they can be played for.
Ingenious Valuation by GVC Holdings
You do have to hand it to GVC Holdings, and that is the way they have valued and structured this deal to buy Ladbrokes-Coral is ingenious!
If there is one thing that bookmakers are seriously worried about it is the affect any reduction in regards to the stake levels that FOBT’s can be played for, and if the stake limits do get reduced down to a nominal £2 per game played, that is going to see many bookmakers shops having to close up.
That is something that the team at Ladbrokes-Coral do of course know about and have been worried about, and as such no matter what the Government of the UK decides, the price GVC Holdings is going to be have to pay for the company is a well judged one.