Ladbrokes Opts out of US Market

Ending months of speculation about its possible entrance into the U.S. market, Ladbrokes announced today that it will not make the jump, at least for now.

Rumors of U.K.-based Ladbrokes' interest in the U.S. market began to circulate in January when the company, operating then as Hilton Group Plc (HG.L), finalized the £3.3 billion (US$5.8 billion) sale of its 416 hotels to its American sister company, Hilton Hotels Corp (HHC). During the HHC-HG.L alliance, Ladbrokes was not in the market to accept wagers from U.S. gamblers. Changes in the executive board and the eventual sale of its lodging assets to HHC, though, meant HG.L had cut all official ties with America. After the sale, neither company was at risk if Ladbrokes, now operating as a U.K.-based standalone, began accepting wagers from the United States.

Press reports perpetuated the rumor mill, emphasizing repeatedly that the U.K. government expressed little to no reservation about its licensed remote gambling operators accepting wagers from the States.

With Ladbrokes free of its American ties and within its legal right to service action from the United States, observers conjectured the company was poised to make a move.

Around the same time, however, concerns about the future of the company took precedence over the possibility of American expansion. Reports indicated that private equity bidders, including BC Partners, Blackstone and CVC Capital Partners, had been attempting to court Ladbrokes for a sale price of about £4 billion (US $7 billion).

Ladbrokes CEO Chris Bell kept the company intact through the period of heavy courtship.

"You'll need a very big war chest before we show any interest," Bell said in January. "This will be a company worth over £4 billion, and my job is to make it even stronger, so if anybody wants to own us, they would have to put up a very big pot of gold."

In June, to the surprise of some observers, Ladbrokes announced a 5 percent increase in profits, plans for international expansion into Vietnam and China and that it was rewarding employees (of more than one year) with free shares in the company.

This month, with Ladbrokes' interim profit report on the way, rumors of American expansion resurfaced. The Sunday Times reported that Bell planned to unveil an aggressive international marketing plan. Record first-half earnings and stagnation in the British gaming market reportedly influenced Bell's desire to take the company international.

Press reports this week have hinted at a number of growth opportunities for Ladbrokes: consultancy ventures in China; expansion into German and Spanish gaming markets; expansion into Turkish and Vietnamese national lotteries; acquisition of U.K.-based gaming operations; and entering the U.S. sports betting market.

In light of recent events involving the implosion of online betting company BetonSports, the arrest of its CEO, David Carruthers, and resultant upheaval in the U.S. legal landscape, Ladbrokes today publicized its reservations about expanding to the United States, putting the rumors to rest for the time being.

"In view of ongoing uncertainties within the U.S. legislative environment, the decision on whether to take business from U.S. customers on our gaming sites remains under review and we will update the market in due course," the company said.