Coverage of the recently announced deal between Ladbrokes and Gala Coral seems to be focusing on the new “largest bookie in the UK” by counting up the number of betting shops between the two. Apparently the answer is 3945. In yet another signal showing how far removed government regulators are from the realities of the businesses they harass, the big story now is that the merged company will have to fight some UK bureau to push the merger through. The bureau will be counting up the number of shops the new company will control, and then if approved, it may be forced to sell a bunch to William Hill or Paddy Power.

So those two are now crowding around looking to take advantage of any forced sales that result from the merger. But the simple fact is that Ladbrokes and Coral are not merging to become the largest bookmaker in the UK, so the number of shops both will now own together is mostly irrelevant. They are merging to become a serious competitor in digital and mobile bookmaking. There are, however, no regulations in place to try to prevent a merger aimed at maximizing digital and mobile market share, which is essentially what this merger is about.

We have already seen how William Hill pulled away from Ladbrokes around the same time that Ladbrokes’ digital efforts were failing. Digital accounted for about 6% of operating profit in 2013. By contrast, William Hill’s digital business accounted for 48%. Up until 2013, the two companies were neck and neck, but Ladbrokes’ digital and mobile failure widened the gap significantly between the two.

The problem was stagnant revenues and increasing costs of doing business. In other words, it’s not that Ladbrokes’ business was shrinking. It was that it wasn’t growing and its expenses were rising. Then it took on PlayTech to completely revamp its digital business, and the move gave some hope for the company because it seemed to be working. Coral also uses PlayTech technology to manage its online business as well, so merging will present less technical challenges while eliminating redundancies.