Ladbrokes, the UK bookmakers who are one of the world’s largest gambling companies, are turning their attention onto the online gambling sector as a viable avenue for expansion. This follows a disappointing run in the first four months of this year resulting in a drop of 34% in post tax and interest revenues for that period.
Ladbrokes own betting shops and kiosks across the UK and Ireland totalling over 2,300. They have recently been seeing a drop in revenue which they put down to an increase in payouts on winning bets and that their online gambling section of operations has not met projected expectations. A spokesman for Ladbrokes has said that the current trend is not a true representation of the company’s expectations for the whole year. They expect trends to return to normal as are now being seen in the month of May which should be more representative of the rest of this year.
Online, there were promotions with free bets which also proved costly for the company in addition to the Internet’s unfavourable cost phasing which hit profits. Despite this, the bookmaker is looking toward the Internet for more growth making online gambling its current priority focus as a way of offsetting the slowdown in its land based betting establishments, which has always been its main source of profit generation.
Ladbrokes Chief Executive Officer, Chris Bell said that they have been having a somewhat rollercoaster-like ride, adding that their costs which are linked to the acquisition of new Internet gambling clients will begin to fall over the rest of this year.
Investec Securities analyst Matthew Gerard wrote that weaker growth from the Irish betting shops, gambling machines and wagering on the Internet is fundamentally more of a concern, adding that this latest financial update is disappointing.
Throughout the month of April, there was a decline of 4% in the amount laid down by gamblers in the UK, while there was an overall 7% decline in Ladbrokes UK betting shops. The CEO of Ladbrokes concluded that the resilience of the business coupled with strong cost control leaves them confident in the full year outturn overall.