British-based bookmaker Ladbrokes said Wednesday that it expects to receive a cash payment of approximately £80 million, or $123 million, from U.K. tax authorities. The company reached a settlement with HM Revenue and Customs (HMRC) to cover almost all of the outstanding items in the tax years dating back to December 2007.
Ladbrokes noted that the settlement would result in the recognition on the company’s 2010 income statement of a £262 million tax credit in relation to prior years. Of the credit, £216 million relates to current tax and £46 million relates to the recognition of a deferred tax asset. As a result, the finance charge in 2010 will be reduced by approximately £20 million to reflect the interest consequences of the settlement.
Ladbrokes said that its guidance for the effective accounting tax rate over the medium term remains unchanged at 19% and predicts that the cash tax rate over the same period will fall to about 15% to reflect the utilization of tax losses.
At the time of this writing, shares in Ladbrokes Plc had gained 3.37% to 162.70 pence per share on the London Stock Exchange (LSE) following Wednesday’s announcement. Ladbrokes is traded on the LSE under the symbol “LAD.”
Ladbrokes and competing U.K. bookmaker William Hill moved their online businesses to Gibraltar last year, a decision that could save the gambling industry leaders millions of pounds. The country is a “white listed” location, meaning that both companies are entitled to advertise and take bets from the U.K., but are no longer liable for taxes that had crept up to 25% of every pound they won.
Both Ladbrokes and William Hill declined a “gentleman’s agreement” to keep running their internet operations in the U.K.; Ladbrokes blamed its move to Gibraltar on “intense competitive pressures” and is now benefiting greatly.
Earlier this month, Ladbrokes launched an online betting service in France in cooperation with the French TV station operator CANAL+. The deal creates a joint venture that will offer sport and horse race betting as well as online poker to French gamers. CANAL+ and Ladbrokes own equal shares of the new venture.
On April 12th, the company announced that it was selling its Italian retail betting and gaming business for about €5.25 million in cash, with the purchaser, an affiliate of Italian gaming group Cogetech, assuming responsibility for about €18 million of guarantees currently provided by Ladbrokes.
Ladbrokes owns more than 2,200 retail betting shops in the U.K., Ireland, Italy, and Belgium. It also operates several online gambling websites offering a sportsbook and several casino games, including poker. Ladbrokes joined the Microgaming Network in February 2009, adding its name to BetOnBet, Eurolinx, GNUF, and Unibet as other sites on the poker network. According to PokerScout.com, which tracks ring game traffic on online poker sites, the Microgaming Network is the ninth largest in the world with a seven-day running average of 1,920 cash players.
