What's going on?

Online gambling group GVC and UK betting firm Ladbrokes Coral announced on Thursday that they�re in talks to join forces and create one of the world�s biggest gambling firms.

What does this mean?

GVC has made an offer to acquire Ladbrokes for just shy of �4 billion (over $5bn). It�s not the first time GVC has approached Ladbrokes, and there�s no guarantee a deal happens � but it appears that both sides are very keen on the idea. A few months ago GVC went so far as to sell its Turkish operations (Ladbrokes saw them as a potential deal-breaker). GVC is generally edging away from such �gray markets�, where many types of gambling are banned; buying Ladbrokes would give it a big footprint in the UK and Australia instead (two of the world�s biggest legitimate gambling markets). Combining GVC�s technology with Ladbrokes� physical footprint of betting shops would also be a smart bet (much like the merger of Paddy Power and Betfair a few years back).

Why should I care?

The bigger picture: America could be the ultimate prize for big bookies.

The US Supreme Court is hearing arguments this week on whether betting on sports should be more widely legalized (outside of Nevada and a few other states). It could be as much as six months before the Court�s decision is announced, but if the floodgates are opened across the US, international firms with existing expertise and technology (like a combined GVC-Ladbrokes) could be big beneficiaries.


For markets: This may be only the beginning of a deal spree in the UK gambling sector.

The UK government is about to conclude a major review of the gaming machines that are ubiquitous in bookmakers (maximum bets are likely to be slashed � hurting gambling firms� revenue). Once this regulatory uncertainty is cleared up, it�s odds-on that a bunch of gambling firms will explore merging in an effort to battle an overcrowded market. In a high-stakes business, GVC and Ladbrokes may be trying to get ahead of the game.