888, Sportingbet ripe takeover targets

Following the merger between PartyGaming and Bwin, speculation continues as to what the next online gambling mega tie-up will be.

And according to a report by the Reuters news network, Sportingbet and 888 are the industry's ripe targets. Both are trading relatively cheaply - 888 down nearly 60% since the start of the year following a profit warning in May, and Sportingbet down 10% due to shareholder frustration that the company has yet to reach a settlement with US authorities.

The settlement issue is an interesting one. The real blue sky all the majors are looking for is a chance to re-enter the US market should HR2267 (or an equivalent) become law and allow for US online gambling licenses to be issued. And in order to be at the front of the queue when licenses are handed out, any outstanding issues with the US justice department need to be cleared up.

Last year Party Gaming paid a settlement of $105 million to earn the good graces of US authorities who contended they illegally accepted bets up until 2006. 888 and Sportingbet are in the same boat (in terms of operating in the US during that period) but as yet have not kissed and made up with authorities there.

Aside from this (not so little) issue these companies seem to be universally recognized as the two most attractive take-over targets in the industry today, and any deals they can do with Washington will only make them more attractive.

And the buyers?

Analysts suggest the likes of William Hill or Ladbrokes could well be interested. But only time will tell.