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Oh, how the bookies must have loved it when Aurora Encore won the Grand National last week at 66/1. Only once in the past 40 years (Mon Mome in 2009 at 100/1) have they had a better day at the National. But the joy has been short-lived for Ladbrokes. The company warned on Monday that profit for 2013 would be at the lower end of expectations. The shares fell 8 per cent.

Shareholders can afford to take some of the bad news in their stride. Ladbrokes suffered from a poor run of results at the Cheltenham Festival, where nine favourites won, and a big jump in weather-related race cancellations. Such things are part and parcel of investing in a bookmaker. But there is more cause for concern elsewhere, particularly from the digital side of the business (never Ladbrokes' strong suit).

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A first-quarter improvement in online sports betting was not quite enough to offset an 11-per-cent fall in gambling. A new deal with online gambling specialist Playtech should help, although Playtech will take a chunk of the earnings. And profits from high rollers, who accounted for about an eighth of the group total last year, halved in the quarter.

On 12 times forecast earnings, Ladbrokes' shares are at a discount to rival William Hill, on 14 times. A year ago the two were the same. But look at the difference in trading. In 2010 Ladbrokes made operating profit of just over £200-million ($312-million). The number for 2015 is expected to be the same. The economy? Perhaps. But William Hill is expected to have increased its profit by a quarter over the period.

The valuation gap might have M&A bankers calculating how much upside there could be from a well-known brand whose shares are cheap because of a poor run of luck and operational problems. After all, Betfair is now in play. But buying Ladbrokes right now looks a little like putting your money on Aurora Encore at 66/1.

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