November 15, 2007

High roller contribution makes the difference for Ladbrokes

Ladbrokes has reported a rise in gross win of 33% for the four month period to the end of October, with profits increasing 84%, with the company’s telephone betting high rollers contributing most of the growth. Excluding high rollers, total gross win increased by 7%, while profits decreased 12%, factoring in the £3.7m cost of Ladbrokes’ recent TV advertising campaign and the cancellation of many racing meetings due to bad weather this summer.

Telephone betting revenues reached £91.8m, with strong high roller activity continuing into November, the company said. Online gaming net revenue grew 5%, customer sign ups rose 21% and unique active customers grew 11%, despite the impact of the World Cup in 2006. Ladbrokes Bingo benefited from a TV advertising campaign.

Net revenue grew across the sportsbook, casino and games divisions but “was partially offset by slightly weaker margins and lower poker net revenue in a very competitive market”, reflecting the continued competitiveness of the European online poker market.

John O’Reilly, head of Ladbrokes eGaming, said the current business environment was challenging for high street bookmakers but Ladbrokes was looking to invest its profits into developing the business. "That means expanding into Europe, which we are doing in Italy and Spain. We are also focusing efforts on our online poker platform, with the launch of a 3D poker interface available in players on our 2D network in the near future.”

Ladbrokes’ UK retail gross win increased 4%, with average weekly gross win per gaming machine increasing 25% to £586, compared with £467 for the same period in 2006. The company said it was difficult to compare football betting activity in July with 2006 being a World Cup year, but said amounts staked since the start of the 2007-2008 season had been considerably higher than in 2006 but the margins had been poor due to unfavourable results.

Ladbrokes has 17 shops operating in Italy, with more expected soon and an Italian language website due for roll out shortly, while in Spain shop premises are being fitted out in anticipation of an operating licence for the Madrid region in the near future.

The levy was still being discussed with the UK government and the deadlock with Turf TV over UK horse racing pictures was ongoing, the company said.