World Business: Making Book on a Sure Thing

For wagering Britons, London stockbrokers last week offered as much sporting activity as the Grand National Steeplechase and the World Cup soccer championship together. Shares of Ladbroke Group Ltd., Britain’s premier bookmaking house, were offered to the public, and thousands queued for days in advance at banks in London’s City and West End to pick up prospectuses and put in orders.

On the big day, all Britain seemed determined to buy the bookmaker lock, stock and tout sheet. Priced at an initial $1.40 each, the 1,350,000 shares were grabbed up in a fraction of the 60 seconds it took Ladbroke’s harried brokerage house to announce that the issue had been “very heavily oversubscribed.” Altogether, investors came running with enough cash to buy the issue 100 times over. So great was the crush that it will be days before brokers can figure out who was first-come and ought to be first-served, thus delaying the opening of regular trading in the stock on the London exchange until this week.

6-to-4 & 13-to-8. The punters obviously figured that betting on the house was a sure thing. Not only did Ladbroke’s raise a cool $1,800,000 in new capital, but future trading is sure to send its 2,466,000 shares of unissued stock soaring well above their total $3,400,000 par value. Few long shots at Epsom ever paid as well. But Ladbroke Chairman Cyril Stein, 39, figures that he and his house have always been odds-on favorites to succeed. “Bookmaking was in my blood from the first,” he says. “I was weaned on the difference between 6-to-4 and 13-to-8.”

Stem’s sense of the odds has made Ladbroke’s the leader of Britain’s $3billion-a-year legalized bookmaking business. Founded at the turn of the century and long famed as the “bookmaker to the Establishment,” the snobbish West End-based firm had all but faded away along with its blueblooded patrons when Stein’s uncle bought the entire outfit in 1956 for a paltry $700,000. The son of a prosperous London horse-parlor and turf-news-service operator, Stein himself became Ladbroke’s top man in 1958 at age 30. Last year he turned $1,700,000 profit from a total of $100 million in wagers.

To do that, Stein modernized what had once been a credit operation for the titled few. He brought data processing to Ladbroke’s Dickensian clerical department, broadened its roster of clients by including many newly rich who formerly “would not have been welcome even if they usually lost.” Noting that in credit betting, “the heavy money tends to come down on the top two or three” favorites in a race—which can put a bookmaker on the short end of the odds—he also began buying up cash “betting shops” (120 to date), the type patronized by smaller bettors who are more apt to take on the long shots.

Golf & Astronauts. Though horse racing still accounts for 90% of Ladbroke’s take, Stein has eagerly diversified. He now books greyhound racing and football, began posting odds on golf in the early ’60s when Arnold Palmer made the pro game popular in England. In 1963, he pioneered the making of book on elections. Current special: 10-to-l odds on an astronaut’s landing on the moon next year.

For all that, Ladbroke’s sometimes goes to the cleaner’s itself. Four years ago, when an unusually severe winter cold snap snuffed out sports events for eleven weeks running, the books closed with a chilly $80,000 annual profit. As a hedge against such disasters, Ladbroke’s bankrolled a new casino and hotel complex (run by Sheraton) on Malta. Completed only last July, it is already returning a steady 10.5%.