Ladbrokes eyes back office switch to Ireland
The owner of British betting shop chain Ladbrokes may move some of its computer servers, which facilitate its various online bingo, betting, and gaming services, to Ireland as a contingency measure in case of Britain crashing out of the EU with no transition deal in place. GVC Holdings completed its near €4.6bn takeover of Ladbrokes-Coral 12 months ago.
The acquisition bolstered an already busy portfolio of online gaming brands such as PartyCasino, Foxy Bingo, and PartyPoker.
The group is to keep its online headquarters in Gibraltar and has already made plans for staff living in Spain but working in Gibraltar if border crossing delays occur after Brexit.
For legal and regulatory reasons, gambling operators providing services to EU customers must have businesses established and licensed in an EU member state.
“Under the regulations of some EU countries, the servers hosting our online gambling platform need to be located in an EU member state,” said GVC.
In order to satisfy these requirements, the group has implemented plans that involve operating those parts of our business which have customers in the EU under Malta online gambling licences, and locating servers hosting our online gambling platform in the Republic of Ireland.
The Irish move is not expected to result in any new jobs being created here.
“Our online businesses will continue to be headquartered in Gibraltar and these plans will not have a significant impact on the number of our employees in Gibraltar,” said GVC.
GVC reported an after-tax loss of £56.4m (€65.4m) for 2018, up from a loss of £34.9m for 2017. Total revenues for the enlarged business came to £2.93bn, up from £790m a year earlier. GVC said underlying pre-tax profit rose from £151m to £434.6m.
GVC said European net gaming revenue — which covers revenue from both online and in-shop betting — rose 16% last year, driven by what it called good volume growth. Over-the-counter wagers increased by 11%.
The group’s European retail business takes in its Eurobet division in Italy and its Ladbrokes shops in Belgium and Ireland. Overall revenue in Ireland increased by 10% last year.
GVC also said the cut to the maximum allowable betting stakes on in-shop fixed-odds betting terminals (FOBTs) will result in the closure of up to 1,000 shops. The group said it expects the move to result in £135m in lost earnings this year.
All of the Ladbrokes-Coral shop closures will be in the UK as FOBTs do not feature in Irish betting shops. Ladbrokes operates 141 shops in Ireland.
GVC’s shares were up by over 7% on the back of the results. The cut to the maximum stake FOBTs is likely to be implemented next month after several UK politicians called for curbs on the gaming machines, which have been widely blamed for allowing gamblers to rack up large losses in a short space of time.
Ladbrokes rival Paddy Power-Betfair publishes 2018 annual results this morning, in which it is likely to update its own estimates on how much the FOBT law change may affect its profitability this year.
Last year analysts warned that Paddy Power-Betfair earnings could take a 3%-6% hit from the UK government imposing maximum betting restrictions on such gaming machines in British betting shops.
