Shares in online gambling group 888 Holdings have jumped more than 8% as investors bet on a possible takeover.
New US laws prompted 888 Holdings to gamble on a change of focus
Bookmaker Ladbrokes has begun talks with 888 management about an offer thought to be worth £470m.
Confirmation of the negotiations came a week after 888 said it was in talks with several would-be suitors about a possible deal.
The move came after the online gambling sector was rocked by new US laws which in effect ban internet betting.
By the close of trade on the London Stock exchange, 888's shares had jumped 10 pence to 120.5p.
Initial reports had linked 888 to a potential £1.6bn merger with rival online group Partygaming.
However, according to a report in The Mail on Sunday, 888's majority shareholders are keener on a tie-up with a traditional gambling firm rather than another online venture.
Experts have predicted there will be a round of consolidation in the sector following new moves which will make it impossible for Partygaming and a clutch of other British online betting businesses to collect revenues in the US.
Analysts now expect companies to switch their focus from the huge US market to concentrate more on Europe and Asia.