A deal has finally been announced for the sale of 359 betting shops from the newly-merged Ladbrokes and Coral to comply with CMA regulations. The price is earth-shattering. Not because the price paid was high but because the value of a betting shop has fallen so much.

Betfred is to acquire 322 shops for £55 million and Stan James 37 shops for £500,000. Of the shops being sold, 185 shops are currently trading as Ladbrokes, and 174 shops under Coral.

Recent press reports suggested the sale would achieve a valuation of £100 million.

Carl Leaver, the CEO of Coral, is on record as saying that a higher price was offered but in the current regulatory uncertainty they were unable to proceed. GBGC understands that private equity, various bookmaking concerns, and a consortium led by Chris Bell, the former Ladbrokes’ chief executive, all expressed interest. But the bigger picture is the completion of the merger and the time delay in applying for operator’s permits with the Gambling Commission for new entrants might have held that up. Shareholders have had to take less than they would have got if time had been on their side.

So far as investors are concerned the sale of the 359 shops must raise serious questions about the value of the estates of both William Hill and the newly merged Ladbrokes and Coral, where two thirds of profits come from the retail estate.

Betfred has paid GB£ 170,807 per shop (contrast that with the GB£ 512,000 it paid per shop in the Tote deal in 2011) and Stan James paid just GB£ 13,500 per shop in the deal. Betfred will now become a major force in retail betting with 1,700 shops.

As GBGC has said before, regulation, taxation and media rights have taken their toll on profits which in turn has reduced valuations. The message to those wishing to take more from bookmakers is clear: there is nothing more they can give. It also offers a lesson for e-gaming: what happens to the land-based business can also happen to the internet too.

by Warwick Bartlett