William Hill in talks with Australia's Crown Resorts, Paddy Power also circling

William Hill has confirmed it is in "very preliminary" talks with Australia's Crown Resorts about a possible merger of their local online businesses, which sparked new City chatter that fellow bookmaker Paddy Power Betfair was also circling the Melbourne operator.

The FTSE 250 company said the discussions were centred on a possible combination of William Hill Australia and Crown Resorts' 62%-owned online wagering business, CrownBet.

New rumours emerged on Friday that Paddy Power Betfair has also held talks to explore a possible tie-up with CrownBet, with Reuters citing two sources familiar with the matter.

"There is no certainty that these preliminary discussions will lead to any transaction," William Hill stated in a Friday response to overnight media speculation that had sent the shares spiking late in the previous session.

Hill's has faced more difficult trading in Australia of late, with amounts wagered down 5% in the third quarter, and it does not look like getting any easier with a credit betting ban due to begin in February and the potential for a ‘point of consumption tax’ to be adopted by individual states.

City speculation in recent months has linked William Hill and rival bookie Ladbrokes Coral with much larger potential deals.

This was revived early this month when online gaming specialist GVC sold its Turkish business in what was seen as clearing the way for a potential tilt at a merger or takeover of Ladbrokes or Hill's.

WMH shares were down more than 1% to 280.5p on Friday, with investors perhaps disappointed that the rumours were only concerning a relatively small deal in a tough market.

PPB on the other hand was up 3.3% higher at 8,820p, while Ladbrokes, after seeing a late spike on Thursday evaporate, was down almost 1% on Friday to 134.4p.