After picking up three awards at the eGR Awards on Wednesday night, narrowly missing out on the Operator of the Year award, it’s neigh-on definite that attending on behalf Betfair will have left you quite the hangover to deal with. This will have been made significantly worse by a news item published on FT.com yesterday morning – something that isn’t curable by a Bloody Mary.
After the founders floated it last month, Betfair’s stock went on the market for £13-a-share and the company valued at around £1.3bn. It hasn’t impressed certain market professionals, which led Investec analyst Paul Leyland to comment: “Betfair is approaching maturity in the UK, faces significant regulatory threats elsewhere, and will gain little traction in financials.
“Betfair needs a liberal tax and regulatory approach to online gambling in order to operate, let alone to thrive. We see this as increasingly unlikely in any major market.”
Leyland went on to say that they needed “everything to go right” to reach the valuation of £1.3bn.
Betfair were quick to reply to this, a spokesperson telling us: “Analysts are entitled to their opinions and we respect them but we believe that Betfair’s unique and innovative business offers long term growth opportunities to investors and it is our job to focus on running the business to deliver those opportunities.”
This comes as UBS issuing a lower than expected target of £12.50 per share, a significant amount below the current trading price of £14.02.
All of the identified risk reiterates what we’ve continually said, that the best model for online gambling companies is staying private and not allowing any of the constraints and threats that becoming public can bring.