Ladbrokes confirms Betdaq discussions

Ladbrokes is in discussions to acquire its trading and pricing solutions provider Betdaq, the operator has confirmed.

The admission comes almost exactly a year after it was first announced that the companies were in talks over a supplier deal designed to bolster the Ladbrokes’ underperforming online division. This was followed by reports in UK newspaper The Times, which claimed that Lads had opened talks over a £50m acquisition of the supplier”“ shortly after the dismissal of director of product Richard Ames ““ in July last year, though the paper now reports that this figure has dropped to around £30m.

Betdaq, owned by Celtic Football Club majority shareholder Dermot Desmond who holds a 2% stake in Lads, was launched in 2000, and operates a B2B service alongside its B2C product. The supplier, which currently has a share of less than 10% of the exchange betting market, is reported to be currently operating at a loss.

Analyst Simon French of Panmure Gordon said that while the purchase would allow Lads to retain players it would otherwise lose to Betfair, additional spend would be required to make Betdaq a profitable acquisition:

“Acquiring Betdaq would provide Ladbrokes with broader product reach and may reduce leakage of certain customers to Betfair but significant investment in product and marketing would likely be required for Betdaq to become a material profit contributor to Ladbrokes, in our view,” French explained.

The move is understood to be the latest step in CEO Richard Glynn’s (pictured) drive to double the company’s share price in five years, which has seen a number of high-profile changes at the business. Glynn announced in February 2011 that the company was to focus on “organic” development, looking to renegotiate all of its core supplier agreements, while acquisition talks with 888 and Sportingbet collapsed in April and October 2011 respectively.

In February last year the chief executive revealed that as part of this strategy Lads was to roll out new mobile and sportsbook platforms ““ both developed in-house ““ over the course of the year, but both were subject to extensive delays. Customers are now set to be migrated to the new sportsbook platform, powered by OpenBet, by the end of Q1 2013, while beta testing of the mobile product will take place over the same period.

In a statement at the time the operator said: “This process, as well as additional upgrades in functionality, will continue throughout Q4. Our plan to migrate customers by the end of Q1 2013 remains on track.”

The announcement arrived as Lads reported strong growth in its interim management statement for the three months ended 30 September, with online net revenues growing faster than those of its retail division, driven by strong sportsbook growth.

While the company did not break out exact figures, it revealed that revenues from its online sportsbook grew 21.8% year-on-year, with in-play contributing 66% of amounts wagered on sportsbook outside horse and greyhound racing. Despite the latest delay in its new mobile platform, the company said that 40% of sports bettors placed wagers via mobile devices.

In September this year Ladbrokes appointed former Betclic Everest sportsbook director Andy Wright as its new trading director while also bringing in Oddschecker founder Tony Robinson to the newly created post of trading strategy director.

Robinson’s trading technology firm Heron Solutions will also work extensively with the operator to develop trading innovations, but when the appointments were announced there was no indication as to the impact of the agreement on the Betdaq discussions, with a Ladbrokes spokesman telling eGR at the time: “We have an ongoing relationship [with Betdaq] and continue to review potential future partnerships.”