Online gambling company Betfair is the target of a possible takeover offer from the private equity firm that owns Formula One motor racing.

CVC Capital Partners said today it was in talks with investors about the possibility of making a joint offer for Betfair, which has a market value of around £800m sterling.

Since joining the London stock exchange three years ago, Betfair has lost ground to competitors at home and is pulling out of markets where gambling regulations are unclear, which provide almost a quarter of its revenue.

Shares in Betfair, which operates an online exchange that allows gamblers to bet against each other, have plummeted to well below the £13 the company listed at.

Chief executive Breon Corcoran, who joined Betfair from Irish bookmaker Paddy Power last year, said shortly after his appointment that the company had "lost its way somewhat".

Betfair is in the process of pulling back from some markets to focus on areas where gambling regulations are clearly defined in a bid to reduce uncertainty and volatility for its investors. The firm recently said it would pull out of Germany and Greece because of problems over licences and punitive tax rates.

"We remain fully committed to delivering on the new strategy and providing improved returns for our shareholders," the company's chairman Gerald Corbett said in a statement today.

Many analysts say the company has suffered from failing to identify clearly if it regarded itself as a gambling or a technology company.

CVC said it had held preliminary discussions with investors Richard Koch, Antony Ball and other partners about Betfair, which could include an offer for the firm by funds advised by CVC together with the two men and partners.

A source familiar with the situation said the potential bidders had yet to meet the Betfair board or to put finances in place for a bid. CVC has been involved in the gambling sector before, having bought leading British bookmaker William Hill in 1999 and selling it three years later.