Taking the publicly traded Betfair private could have interesting consequences for the betting exchange. Under new CEO Breon Corcoran, Betfair has embarked on a strategy focused on regulated markets, but withdrawals from grey markets like Germany, Greece and Cyprus have taken a significant bite out of Betfair’s revenues. A private company could have a far greater tolerance for risk in these grey markets. The hubbub was sufficiently frenzied for Betfair shares to close out Monday’s trading up nearly 12% to 782p.
Betfair’s chief exchange betting rival is Betdaq, which was acquired by UK bookies Ladbrokes earlier this year for £30m. When Lads turned in their 2012 report card in February, CEO Richard Glynn stated that 2013 was off to a “promising start” with revenue up 7.2% over the first six weeks of the new year. Lads has now issued a far more dire preview of its Q1 results, saying that while revenue was up 3.2%, operating profit dropped £13m (25.8%) to £37.4m. Glynn also lowered full-year expectations, saying annual operating profit would likely come in around £188m, compared to £206m last year. The warning pushed Ladbrokes’ stock down 8% on Monday, closing at 199.3p.
Glynn said the quarter was “softer” than expected due to a £9m rise in expenses, the imposition of the new 20% gaming machine duty plus a £6m revenue hit from this year’s Cheltenham festival. Cheltenham was particularly brutal on Lads’ Irish operations, which saw revenue fall 8.4%. Lads’ online sportsbook saw revenues rise 13.2%, but online casino fell 11.4%, resulting in a net online revenue decline of 0.7%. The online decline is expected to persist throughout the year as Lads transitions to its new Playtech-supplied online platform, but Glynn claimed to have “a number of initiatives … already underway to redress” some of Q1’s problem areas.