The UK’s largest spread betting and CFD broker, and the grandfather of the spread betting industry IG Group, owner of IG Markets, has announced it has teamed up with a leading global accountancy firm to court potential buyers for subsidiary Extrabet, its sports betting and online casino division which it acquired back in 2006.
Extrabet has been IG Group’s vehicle for sports betting after the claw back of IG branded services, and has been subject to tumbling revenues in recent years as its value continues to diminish. While it is thought a buyer will be found, questions have to be asked as to whether or not the £20m price-tag represents good value for money, and numerous analysts have cast doubt over whether a recent spate of poor results could undermine its value somewhat.
While the Group overall saw profits leap by 25%, of which 2% could be attributed to the contribution from the faltering Extrabet, we see this as an attempt to stop the rot before it truly sets in, and to offload this compartment of the business before revenues and profits dwindle any further.
Fundamentally, Extrabet remains a solid business, and incorporates the entire IG sports trading division under its umbrella to specialize in fixed odds, in play betting. But with rapidly increasing competition within the gaming market, and overall poor performance over the last few years over the course of the recession, this might just prove to be a shrewd move from the industry’s original innovators.