888 deal creates more merger rumors

888 Holdings Plc. and Rank announced a deal today between the two companies that has restarted rumors of a merger for the U.K.-based gambling company.

Rank runs the online betting shop Blue Square, and 888 plans to use the company's bookmaking capabilities to offer 888's poker players at Pacific Poker and its casino users the opportunity to bet on sports or horse racing without heading to other online gambling sites.

Under the terms of the agreement, Blue Square will supply a multilingual betting service to 888 with revenue being shared between the two companies.

"This is an agreement that strengthens both parties," said Martin Belsham, Blue Square managing director. "We will benefit from 888's international experience and liquidity as we extend our reach beyond the U.K.; and 888 will complete their customer offer by adding Blue Square's innovative range of betting products."

The new service is expected to be available to 888 customers during the first quarter of 2008.

"The deal will enable 888 to capitalize on our extensive global customer base and grow in new territories," said Gabi Campos, 888 senior vice president, head of offering.

"Our analysis shows that a significant proportion of our players bet on sport events occasionally and the inclusion of sports betting in our offering is in-line with our focus to aid customer acquisition and reinforce 888 as the entertainment destination of choice."

The deal has also sparked rumors that this could be a prelude to a merger between the two companies, who have both seen share prices drop in the last year. 888's shares dropped after it withdrew its casino and Pacific Poker business from the United States because of the Unlawful Internet Gambling Enforcement Act.

Rank lost business at its Mecca bingo halls, which has affected its share prices. The company is best known for its Grosvenor casinos and Park Tower in Knightsbridge.

Earlier this year, 888 had been rumored to be in talks with Ladbrokes Plc. about a possible merger. After acknowledging that they were in talks, the companies parted ways in April without reaching a merger deal.

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