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Ladbrokes and BSkyB Make Major TV Betting Deal

"The move points the way to the biggest potential growth area in betting, and on Thursday brokers ABN Amro forecast that ten per cent of UK betting turnover could come through interactive television by 2005, with the Ladbrokes-BSkyB tie-up generating £75 million to £100m by that time. [1£=$1.41]

"A new company formed by the joint venture is expected to start operating in October with exclusive rights for five years—and non-exclusive rights for a further five years—to offer interactive sports betting services to the Sky Digital channel.

"It will also be the exclusive supplier of betting on Sky internet sites and have non-exclusive rights to operate an interactive service on non-sports channels on Sky Digital, which currently transmits to 12 million viewers in more than five million households.

"Ladbrokes are working towards enabling customers to bet with one account number on all platforms – phone, internet and interactive television—when the new service is up and running, making the placing of a bet while watching an event live on television even easier.

". . . Ladbrokes already have interactive deals with Ondigital, ntl and Telewest, but the link with BSkyB – which is costing Ladbrokes' parent company, the Hilton group, £30m -- will produce volume at an instant.

"The deal also solves the problem for Hilton chief executive David Michels of what to do with Vernons Pools.

"Hit by the National Lottery to the extent of having lost 60 per cent of sales since 1995, Vernons was rumoured to be on the market, but the nearest bid to the £40m valuation was said to be £25m from an online business.

"Vernons, which made £5.6m profit last year on sales of £31.7m and has a customer database of over six million, will be the name associated with the pools betting operation.

"The one casualty in the deal is the title of BSkyB's betting arm, Surrey Sports, which is being added to the joint venture and will disappear as a brand name, to be replaced on the fixed-odds side by Ladbrokes.

". . . (John) O'Reilly (managing director of e-gaming for Ladbrokes) said: "Surrey have been operating an interactive service on Sky Digital since December 2000. They have the expertise of betting in running on live events, as well as technology skills and organisational capacity which will help when we move our internet operation out of Gibraltar later this year."

". . . The company (BSkyB) acquired Surrey Racing – and the all-important internet betting licence in Alderney – as part of the £300m purchase of Sports Internet in May 2000, and on Thursday reported that in the nine months to March 31 the retitled Surrey Sports division produced £55m in betting revenues.

"Interactive betting is expected to be used as a powerful weapon in BSkyB's intention to increase annual revenues per subscriber from the present £286 to £400 by over the next five years. . . ."

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