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WorldSpreads (LON:WSPR) report: White label agreement with Ladbrokes

Contributed by Daniel Stewart & Company

By Daniel Stewart & Co

- WSPR has announced a white label agreement with Ladbrokes to provide its financial spread betting service via www.financials.ladbrokes.com.

- As is usual under the terms of these deals, the platform will be marketed to Ladbrokes existing customer base under the Ladbrokes brand.

- No pricing information or deal structure has been provided in the announcement. However, we would suggest that these deals tend to be structured in two ways:
1. Based on deal flow – this has the potential to be costly because WSPR would be obliged to pay Ladbrokes for its share of referred trading activity regardless of whether the client wins or loses.
2. Based on profit per trade – this, in our view, would be the preferred structure since there would only be a pay-away to Ladbrokes if a trade generates profit.

- Notwithstanding the lack of detail – which is common with white label deals, we would consider Ladbrokes to be an important contract win for WSPR, given the size of client base it potentially provides access to (as an indication, Ladbrokes website suggests that Ladbrokes.com has 767,000 active users; clearly only a proportion of these will be suited to financial spread betting).

- We consider this deal to be entirely consistent with WSPR’s UK growth strategy and it follows on from other white label partner agreements with the likes of Victor Chandler (announced Dec 08).

- We hope to be able to reissue forecasts shortly.