Crown Ltd. is poised to make a power play down under with online betting exchange Betfair’s Australian shares.
The move can be interpreted as James Packer’s attempt to gain full control of the 50 percent shares of Betfair’s business that he doesn’t own yet and it could be a smart play considering that he gets full control of a joint venture that his partner doesn’t appear to be too keen on continuing.For one
If anything, selling off its shares could be an equally sharp tactic for Betfair, which has been struggling with its business in Australia to the tune of $47.3 million in loses since it began offering its unique brand of bookmaking in 2007. That’s even taking into account the company’s revenue last year when it earned $54.9 million, 8.6 percent more than what it earned the previous 12 months. Still, Betfair’s 2013 financial year ended up being $1.6 million in the red, making it the sixth time in seven years that Betfair has reported a loss to its year-end books.
Growth has been there, but at the rate it’s going, it doesn’t look like Betfair is ready to sit around and wait for it to happen. That’s why the opportunity for James Packer and Crown to take full ownership of the business and change the model into the more lucrative fixed odds system. Packer only needs to look at the competition in Australia to see just how more lucrative that is and with his deep pockets, he could give competitors like Tatts Group and Tabcorp a serious run for their money.
The move also has implications on the sports betting landscape in Australia, especially with foreign operators making huge splashes in acquiring businesses in Australia. Paddy Power was the first to do it when it bought out Sportsbet a few years ago, and more recently, William Hill went on a spending spree last year, acquiring Sportingbet, Centrebet and Tom Waterhouse.