When a spread betting firm makes a big deal about setting up a fixed-odds sportsbook arm, then wants to get rid of it, chances are it's not making any money.
IG Group to sell Extrabet
Financial spread betting business IG Group has recruited accountants PricewaterhouseCoopers to find a buyer for its sports betting arm Extrabet, media reports at the weekend have suggested.
Extrabet accounts for an estimated 2% of IG Group’s overall revenues, however the business values the division at around £20m, the Sunday Times reported.
Analysts have previously questioned whether the business, which suffered a fall in revenue of more than 30% last year, is worth much. IG Group and PwC both declined to comment.
I'd have to agree with the last comment. Extrabet's client list is common with the spread side of the business, and one has to wonder how many genuine fixed-odds punters there are, rather than occasional dabblers. Extrabet's sports prices are all powered by the powerful IG spread models, so removing the company from that would mean they'd have to start again, thus making the software redundant. So what is left of any value at all?
SportingIndex sold its fixed-odds sports section SportingOdds to Sportingbet several years ago, when the industry was less competitive and the financial markets more buoyant. It's not overly difficult to get a licence in the UK, so that rules out the advantage of a foreign firm buying the company in order to bypass the hassle of a drawn-out licence application.
£20m? To quote the classic Australian film The Castle, "Tell 'im he's dreaming!"