Sun, Sep 8, 11:50am by Kevin Pitstock
Ladbrokes, one of the UK’s top names in gambling, entered the Australian market by purchasing Gaming Investments. Ladbrokes paid AUD $22.5 million for Gaming Investments, which is the owner of the Aussie online bookmaker Bookmaker.com.au and Panda Gaming.
Having been around since 1886, Ladbrokes is the oldest gaming company in the United Kingdom. At the time, the company catered solely to the British upper classes. Its online operations make it a rival to major Internet brands like William Hill and Paddy Power, which have also become involved in the Australian gaming market in the past few years (Paddy Power in 2010, William Hill in 2013).
While the acquisition of Gaming Investments is minor in comparison to Sportsbet and Sportingbet, owned by Paddy Power and William Hill respectively, it signals a desire on the part of a third major UK gaming company to join the competition for Australian punters.
Bookmaker.com.au saw $400 million in stakes in this financial year. That’s an impressive sum of money given the fact the site was not launched until February 2012–just over a year and a half ago. To Ladbrokes, the company looks like a low-cost way to break into the Australian niche.
Ladbrokes CEO Richard Glynn says his company wants to extend itself into “key regulated markets” around the globe. In comparison to its chief rival, Ladbrokes is overly dependent on the UK customer for its revenues. 71% of the company’s revenues comes from British residents.
That’s compared to 43% from Ladbrokes’s main competitor. As the Australia Gambling Blog reported recently, a levy on gambling involving UK citizens is going to go into force in December 2014. When this happens, those companies which depend on the United Kingdom as their business model are likely to find themselves way behind in the casino wars.
The Place of Consumption Tas has been controversial in the United Kingdom. The key gambling registration centres, Malta and Gibraltar, have said the tax is there to raise revenues and not protect consumers, as the UK government contends. The government of Malta have collected £500,000 to launch a legal challenge to the PoC law, stating that it violates EU law by imposing changes to regulations simply for the sake of collecting taxes.
Legal experts say it would be hard for the United Kingdom to argue in court they are imposing the Place of Consumption levy based on consumer protection issues, as no such issues have arisen.
Malta and Gibraltar are not the only entities which have threatened litigation. William Hill plc has threatened lawsuits over the same law, which would impose an additional 15% tax on their gaming revenues for UK based residents. Fear of the PoC is driving companies like Ladbrokes to seek non-UK customers. Ladbrokes is in particular danger of losing massive revenues to the PoC, which explains why it’s getting into the Australian gambling niche.
Several of the top gaming companies in the British Isles seem to have come to the same conclusion: the Australian gambling industry is one of the best investments in the world. Australia combines a deep passion for gambling with a stable set of regulations. This combination makes Aussie gambling a safe, can’t miss investment opportunity.
William Hill has invested a potential $780 million in the Australian market in 2013 alone. $670 million went to buy Sportingbet earlier this year, while between $34 million and $110 million went to purchase TomWaterhouse.com. Three years ago, Paddy Power bought Sportsbet.
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