BETANDWIN took a step closer to becoming the world’s second-largest online gaming company yesterday after entering takeover talks with Ongame over an estimated €500 million (£337 million) bid.

Betandwin, a sports betting company listed in Vienna, would leapfrog Sportingbet, the UK operator, into second spot after PartyGaming if the deal goes ahead.

The takeover would also enable Betandwin to crack the competitive gaming market, offering customers broader options than only betting on sport. It would enable gamblers who dabble in both sports and casino bets to hold a “common purse” rather than setting up more than one account.

Ongame, a Swedish company whose main subsidiary, PokerRoom.com, is domiciled in Costa Rica to get around Sweden’s monopoly laws, said there was “no certainty that any final binding agreement on the transaction will be reached”. The company is being advised by HSBC.

Charles Hall, an analyst with Panmure Gordon, the broker, said: “It reinforces the theory that the major listed players are firmly in pole position to dominate the industry as others will choose to sell rather than float.”

In the past few months Empire Online, the gaming company, was approached by both PartyGaming and Sportingbet, which already owns Paradise Poker.

This week PartyGaming announced results seen as “staggering” by analysts, with daily gross poker revenue up 14 per cent in the two months to November 30, from the third quarter.

Meanwhile, Empire Online is suing its former ally PartyGaming after the world leader froze rivals out of its PartyPoker website by cutting its links with “skins” — websites that make money by directing players to other competing sites. Empire Online is believed to be looking for several hundred million dollars and an order making PartyGaming restore its links.

PokerRoom.com is the world’s third-ranked poker site. Ongame, set up by two Swedish professional poker players, Oskar Hörnell and Claes Lidell, also owns HoldemPoker.com.

PokerRoom.com had about six million customers at the end of October, 85 per cent of whom are in the US, Canada and the UK. Betandwin’s customers are concentrated in Europe and Russia. If the deal does not go ahead, Ongame will press on with plans to float in London next year, probably in the second quarter.

RAISING THE GAMING STAKES

There are 20 online gaming sites in the UK that have more than 100,000 users. The National Lottery site has about 1.7 million users

Sources: Christiansen Capital Advisers; Nielsen/NetRatings