According to a report from The Times, gaming company Betfair (BET.L) may be close to selling its LMAX unit as well as leave unregulated markers as the firm’s new CEO Breon Corcoron is expected to focus on its core gaming business. The strategy change occurs as Betfair exited both Germany and Greece during November. Betfair exited Germany after the country had levied a turnover tax on sport events gambling. Later in the month they left Greece as the country has seen an exodus of gaming companies due to a lack of clarity on new regulations passed there.
For Corcoron, Thursday’s Interim Results release will mark his first full quarter at Betfair after becoming CEO on August 1st, having previously been the COO at Paddy Power PLC.
For LMAX, FSA Regulated FX and CFD exchange has never been reported as profitable. However, its annual results for April 2011 to 2012 released in June showed encouraging volumes data and indicated it was close achieving break-even. Also, in its most recent Interim Results release in September, Betfair stated “LMAX continues to win new customers for its Exchange product and volumes have remained robust.” Nonetheless, LMAX appears to be no more than an investment for Betfair that was based on leveraging a financial exchange with the gaming company’s existing matching engine technology. As such, with Corcoron reportedly focusing on Betfair’s core regulated businesses, LMAX would be seen as a likely sellable asset. On the other hand, with prices for FX related firms being soft in the current environment, and Betfair claiming to have satisfactory financial Liquidity , it could make more sense for Betfair to continue holding onto LMAX as it could probably get a better price when overall volumes pick up.
Betfair won't be the first to leave LMAX as earlier this year Goldman Sachs, who had a 12.5% stake in the firm, decided to sell it back to Betfair.
