* Operating profit rises for merged group
* Gambling companies await review of betting terminals
* Sector has seen series of deals
(Adds details, CEO and analyst quotes)
By Rahul B
March 28 British bookmaker Ladbrokes Coral Group
defended betting terminals on Tuesday as speculation of
a government crackdown on the profitable gambling machines sent
its shares lower despite a 22 percent jump in annual operating
The company, created when Ladbrokes joined forces with Coral
in a $3.4 billion merger last year, said operating profit rose
to 264 million pounds ($333 million), helped by growth in its
digital and European retail businesses.
Shares in the company were down 1.7 percent at 133p by 1015
GMT, with attention shifting to a government review of
fixed-odds betting terminals due by the end of May.
One possible outcome of the review would be a reduction in
maximum stake, which is currently 100 pounds every 20 seconds.
Any reduction would hurt companies such as Ladbrokes and
rival William Hill which retain large chains of betting
shops on British high streets.
"The review was a call for evidence and we have provided
evidence which suggests that the stakes are not the principal
cause for problems in gambling," Ladbrokes Chief Executive Jim
Mullen told Reuters.
"If that is the case, we are hoping that there would be a
positive outcome for us," Mullen added.
Fitch Ratings, in a note last week, said it believes that
tougher betting restrictions on in-store gaming machines would
help online channels emerge as a bigger growth driver.
The issue is likely to weigh on betting companies until
there is clarity.
"Reforms that undermine profitability, such as significantly
reducing the amounts that can be staked at any one time, would
have serious consequences for the group," said Laith Khalaf,
senior analyst at Hargreaves Lansdown.
The company upgraded its forecasts for cost benefits from
the merger to 100 million pounds from 65 million and said it was
still assessing revenue opportunities from the combination.
The merger of Ladbrokes and Coral was one of a number in the
sector, with Paddy Power and Betfair also having joined forces.
On current trading, Ladbrokes said total group net revenue
was 2 percent ahead of last year for the period of Jan. 1 to
($1 = 0.7943 pounds)
(Reporting by Rahul B in Bengaluru; Editing by Mark