SOURCE: telegraph.co.uk

(London, England) — Ladbrokes' £470m takeover of online gaming firm 888.com has run into trouble, prompting much of the gambling industry to write the deal off.

The spectre of U.S. litigation over 888.com's previous trading in America remains a sticking point that is insurmountable, according to several sources close to the deal.

Last year George Bush signed a law making online gambling illegal in the U.S. Following that, a flurry of subpoenas from the U.S. Department of Justice were issued to UK investment banks and lawyers, requesting paperwork and emails linked to the former activities of UK online gaming companies including 888.com.

Ladbrokes' chief executive Christopher Bell's claimed that the talks, which began last November, are ongoing. But it is thought that he was spooked by news last week that John Anderson, 888.com's non-executive director and former chief executive, was one of several online gaming executives called to answer questions by the French authorities.

The move has caused others at Ladbrokes to question whether a deal with an online gaming brand is prudent. Industry sources said that the company wants a clause in the deal granting it indemnity if the U.S. or any other authorities come calling.

"We've had the U.S. situation and now Ladbrokes is concerned that the French situation might lead to trouble. 888.com has no U.S.-facing business anymore but there is no telling where the DoJ investigation could lead," said an executive close to the deal.

Spokespeople for both companies publicly maintain that talks are ongoing. But privately each believes that shareholders would be happier with the status quo.

One American non-executive on Ladbrokes' board is thought to be particularly nervous about the prospect of U.S. court proceedings.

"There is no certainty a deal will be done. They're looking at the legal side of things. There are numerous complications, any of which could see the deal called off," said one gambling executive.

A Ladbrokes spokesman remained confident that the deal would go ahead. "Both sides are aware of our responsibilities and if the deal [were] off we would release a statement immediately," he said.

Jason Chess, a gaming lawyer at Wiggin, said: "The Americans see the proceeds made from the retrospective trading on the part of the online gaming firms as the proceeds of crime and could chase the perpetrators."