The two firms are gambling on their link-up paying dividends

Leisure & Gaming said the purchase of Stanley Entertainment would boost its customer base and complement its recent purchase of online gambling firm VIP.

The two also agreed a link-up, under which Leisure & Gaming will develop any future Stanley online presence.

In return Stanley, which has 41 UK casinos, will recommend its members use Leisure & Gaming's websites.

The partnership will last for an initial 12 months, and also involves online casino, poker and slot games.

'Great value'

"We are very pleased to announce these ventures with Stanley Leisure, which include the acquisition of their online casino business, and a wider partnership in online gaming," said Leisure & Gaming chief Alistair Assheton.

"We are confident these will deliver great value to both parties moving forwards."

The Stanley Entertainment purchase is an all cash deal, and also involves a potential deferred payment of a further �280,000.

It comes as interest in the online gaming world continues to climb - just last week, rival firm Sportingbet revealed its annual profits had more than quadrupled to �40.9m, boosted by revenue from online poker.

Meanwhile, a number of firms such as 888.com and Partygaming have listed on the UK market in an effort to reap the benefit of the growing popularity of online gaming.

And last month, Sportingbet confirmed it was in takeover talks with internet poker and casino site promoter Empire Online.

Partygaming's June flotation marked the biggest debut on the London market in the last five years - its offer price of 116p a share valued it at �4.64bn.

According to a report by the Research and Markets Group, released last year, the internet gambling market will be worth �71.1bn ($125bn) within 10 years.