Leeds-headquartered private online gambling operator Sky Betting & Gaming (SkyBet) may be set for London listing, Reuters reported on Monday citing unnamed sources.
SkyBet’s majority owner CVC Capital Partners has reportedly hired Rothschild to examine listing opportunities for the British gambling company at a time when online gaming and betting is thriving in the UK and equity markets are booming.
Reuters reported that Rothschild will hold a so-called beauty contest next week in a bid to engage banks to arrange the IPO for SkyBet. It is believed that the gambling company could be valued at between £2.5 billion and £3 billion.
SkyBet was founded back in 2001 by British broadcasting company Sky. In 2014, private equity firm CVC Capital Partners acquired an 80% stake in the gambling operator for around £800 million, while Sky retained a 20% stake.
SkyBet has been benefiting from the growing popularity of online gambling in the UK over the past several years, growing into one of the nation’s largest gambling operators. According to figures from the UK Gambling Commission, online gaming and betting currently accounts for a third of the British gambling market.
SkyBet said in its report for the financial year ended June 30, 2017 that it managed to narrow its pre-tax loss to £3 million from £37.8 million for the prior year. The company generated revenue of £515.8 million during the previous financial year, up from £373.6 million in 2016.
Its results from the past several years encouraged SkyBet to undertake expansion across other markets. Taking advantage of Sky’s purchase of Sky Deutschland and Sky Italia in 2014, SkyBet later on selected namely Germany and Italy to launch its operations in. Last year, the company went live with an online gambling website in Italy. It has also said that it is watching closely regulatory developments in Germany and has even hired staff to launch operations there.
Upcoming Changes in UK’s Online Gambling Landscape
While interest in online gambling seems to be growing, iGaming and betting operators are gearing up for a bit of a hard time. The UK Gambling Commission recently presented proposed changes to its Licence conditions and codes of practice, including ones related to the way licensed companies are advertising their products.
A number of operators were imposed heavy fines last year, mainly due to their failure to comply with regulations when promoting their businesses to UK customers. Some of the violations involved third-party affiliate partners of the gambling companies.
Last September, SkyBet announced its rather controversial decision to close its affiliate program and to terminate the contracts of all its affiliate partners, thus denying them commissions on previously referred players.
Despite the regulatory challenges, it is believed that UK’s online gambling sector is poised to grow even further, as the land-based sector of the nation’s gambling industry is facing a heavy regulatory crackdown. The UK government is set to announce by how much it will reduce the maximum stake of the highly controversial fixed-odds betting terminals any time now. According to media reports from last week, MPs might cut the maximum bet to just £2 from £100.
The massive reduction could cost bookmakers hundreds of millions during the first year, and it is believed that companies with strong retail businesses across the UK will seek to boost their online gambling arms or to merge with major online gambling players to offset losses.
Robert Johnson is an experienced web author and blogger. He has over three years of experience as a freelance journalist and writer.