November 28, 2008

Sportingbet looks to live streaming to increase revenue

Sportingbet is set to grow its sportsbook revenue through a focus on live streaming of sporting events for its key markets, the company said today in its first quarter trading update.

The company launched its live streaming on 29 October and said raw data showed there had been an increase of between 5% and 10% in total gaming revenues.

Jim Wilkinson, Sportingbet’s finance director, said the company suffered an initial drop in margins on in-running betting after launching the feature, but those margins had “recovered to the previous levels as we increased the number of markets we offered in-running”.

Sportingbet announced a 45% rise in operating profits for the three months to 31 October, and said it was “cautiously optimistic” it would meet the Group’s full year forecast, despite fears of a recession.

Andrew McIver, Sportingbet’s chief executive, said these results showed the group had made a solid start to the new financial year.

“Whilst sports betting has historically shown itself to be ‘recession hardy’, no industry is ‘recession proof’,” he said. “That said, customer metrics remained very robust both during the quarter and in the four weeks since it ended.”

Wilkinson added that the industry would be affected by the recession but Sportingbet had an advantage in that it operated in markets where levels of broadband penetration were low compared to Western Europe.

The operator reported a 28% rise in net gaming revenue to £38.9m, up from £30.4m for the same period last year.

Sportingbet also reported a 25.4% rise in gross win to 364.9m, up from 290.9m in 2007. Operating profit was up 45.2%, to £6.1m, and EBITDA rose 42.9% to £8m. The group reported a pre-tax profit of £4.9m, compared with a loss of £1.4m for the three months to October 2007. As at 31 October, the group reported £41.8m of cash and other liquid resources on its balance sheet.

In Europe, net gaming revenue from sports betting was up 19% on the previous year, while the Australian business saw a 97% growth, almost doubling to £7.1m for the quarter due in part to the relaxation of advertising restrictions in new South Wales and Victoria.

The group also reported strong figures for casino and games, with net gaming revenue up 34%, which the group said was helped by a strong flow of customers recruited via its sport sites. Poker revenues, however continued to fall, with NGR down 4% on the previous year, which Sportingbet attributed to difficulties competing with US-facing poker sites. Talks with the US Department of Justice were progressing, according to Wilkinson.

The operator reported positive growth from its Spanish, Greek and Eastern European markets, but said it continued to struggle in the UK and Italy due to overservicing of the markets and expensive media environments. Sportingbet's overall margins in its European markets are around 10.7% and those experienced during the live streaming of sports events were 9.4%, Wilkinson said.

Sportingbet also reported a 42% fall in gaming revenues in the Turkish market as a result of downsizing its activities in the region. Going forward, the group plans to launch a sports betting operation in the South African market, as well as expand further into the European football markets.

Betsson Says Swedish Authorities Gambling with Taxpayers Money

Betsson has warned Swedish gaming authorities that they risk a claim for damages from the company, after the County Administrative Court of Södermanland rejected Betsson’s appeal of an injunction against its Swedish retail outlet, Shopsson.

The company said that it would appeal against the County Administrative Court’s ruling regarding the betting shop to the Administrative Court of Appeal, as it believes the shop complies with EC-law.

The shop in Stockholm has been in operation for six months and became the subject of enforcement action by the country’s Lottery Inspection for promoting the activities of, an entity classified as an illegal gambling provider under Swedish gaming law.

In July of this year the Lottery Inspection imposed a fine of SEK2.5 million on Shopsson to force it to end its advertising of

In its ruling of November 7th, the County Administrative Court rejected both Betsson’s appeal of the Lottery Inspection’s injunction and the request to obtain a preliminary ruling from the European Court of Justice. The ruling flies in the face of earlier decisions by Swedish prosecutors and public courts, including the Supreme Court and Svea High Court, which have found that the Lottery Act may be incompatible with European law.

Betsson maintains that the shop is compliant with European law and has therefore decided to appeal the ruling to the Administrative Court of Appeal.

“We have to appeal given the juridical situation,” said Betsson CEO Pontus Lindwall. “As the state now risks a claim for damages, the Lottery Inspection and the County Administrative Court are gambling with taxpayer’s money.

“Since we are pleased with the outcome of the shop we have no intention to shut it down. In addition to placed bets, which have continuously increased during the autumn, the shop gives us a possibility to meet with our customers and give them a unique service. We already have a number of regular customers who appreciate the possibility to place bets with better odds in a physical environment,” added Lindwall.

Shares in Betsson AB (STO:BETS-B) are trading up 1.66% in Stockholm this morning at SEK61.25.

Stanleybet Files Formal Complaint Against Italy with EC

Stanleybet International has filed a formal complaint with the European Commission denouncing a number of legislative, administrative and judicial measures by the Italian State following the recent new concession re-awarded to Sisal SpA for the Superenalotto prize game, the richest and most popular of all gaming products offered in Italy.

Stanleybet's complaint relates to the concession being awarded under a tender which excluded operators other than the three main Italian lottery and betting operators, Lottomatica, Sisal and Snai.

According to Stanleybet every gaming operator was confronted with terms of tender to which no reasonable entrepreneur could choose to commit to, other than the three main Italian operators.

Considering the terms of the tender, in respect of historic gaming turnover, size and type of network and financial guarantees to be provided, Stanleybet said it was not a surprise that potential applicants considered the tender as “pre-awarded”, and therefore no operator or any other major lottery applied to run one of the largest lotteries in the world.

Stanleybet said that after more than four years of litigation, the company's applications to have access to the management and distribution of the Superenalotto game have been completely frustrated by the Italian authorities.

By contrast, Sisal SpA, who secured the exclusive Superenalotto concession without any public tender in 1996 until 2001, was re-awarded the concession in 2008, through a tender from which Stanleybet International was barred. The concession will expire in 2017.

John Whittaker, Managing Director of Stanleybet International, said: “The Italian authorities have once again demonstrated a total disregard for EU law in relation to competition and public procurement rules. We will continue to defend our legally enshrined rights to offer our services and to denounce unjustified restrictions to those rights wherever they occur.

"Despite all its claims, Italy is still a long way away from being compliant with the EU Treaty. It should remedy the situation immediately. We call upon the European Commission to investigate the complaint speedily and to do all it can to resolve this inequity.”

Earlier this month Stanleybet International launched The Fair Play for Sports Betting campaign calling for a fair, open and equal access to European markets for all EU-based sports betting operators.

November 26, 2008

Bundesliga sponsorship outnumbered Premier League

The German Bundesliga has gained impressive status in the world of shirt sponsorship, following a recent announcement that its total related income outnumbered that of the English Premier League.

While the German football league may not be functioning at full capacity, Bayern Munich now holds the reigns in the most valuable shirt deal, beating out Manchester United.

In its tenth annual European Jersey report, SPORT+MARKT indicated that economic conditions are directly influencing England’s sponsorship deals because of the current value of the GBP against the EUR. Ongoing market changes can also be held responsible for the decrease in shirt sponsorship deals across the six primary European leagues. Since last season, the numbers have fallen by about EUR 12 million, a first for the leagues.

In a statement issued by The Times, SPORT+MARKT Executive Director Hartmut Zastrow confirmed the facts, stating that a weakened British pound is at the source of the Premier League’s shirt sponsorship decline. He also pointed out the fact that XL airlines, sponsor to West Ham United, has gone bankrupt, in addition to West Bromwich’s ongoing quest for a sponsor.

Despite the fact that in recent years, an increasing number of financial institutions have replaced the more traditional types of sponsors in Europe, Zastrow expects to see another shift take place on account of the economic crisis. He further noted that if the British pound regains its strength, the Premier League will very likely resume its role as shirt sponsorship leader.

November 25, 2008

EU Member States may look to harmonise egaming regulation

EU Member States may be shifting their stance on online gaming and look to find a common approach to regulating the sector and in the process end years of deadlock when it comes to finding a harmonised EU-wide policy for the sector, according to Reuters.

A copy of the EU document obtained by the news agency stated: "While the legal frameworks differ, there are significant similarities in the member states' objectives as regards gambling and betting." European ministers will discuss the document on December 1, with some changes anticipated from states strongly opposed to any kind of opening of their gaming sector.

The issues that will be debated will include cooperation between national regulatory bodies to combat money laundering and fraud and corruption, a cap on pay-outs to players and an end to “double-taxation by taxing gaming where it takes place”.

France, currently holding the EU presidency, said there were “already grounds for seeking a common approach” back in July and French budget minister Eric Woerth recently said “Europe” may have to look at finding a regulatory solution for allowing the industry to work across borders and countries.

Others in the online gaming industry have interpreted this as a delaying tactic by the French, who are due to submit their draft regulation for the controlled opening of their online betting sector next month. But Sigrid Ligné, secretary general of the European Gaming and Betting Association, told Reuters: “In the end it's going to be back to the Commission to decide if it can take any further steps or if there is any need to do something new or different in the issue."

A dozen EU states are said to be supportive of the common approach to regulating in Europe although Britain and Malta were critical, Reuters said.

November 21, 2008

Bwin enters partnership with French media group; focus on pure growth for 2009

Bwin has entered into a joint venture agreement with the French media company Amaury Group in anticipation of the controlled opening of the French online betting market next year, Bwin revealed this morning as it published its third quarter trading update.

Amaury Group publications include the daily sports paper L’Equipe, newspaper Le Parisien as well as France Football magazine and the cycling publication Vélo Magazine.

Its offshoot Amaury Sport Organisation (ASO) organises sporting events such the Tour de France, the world’s most popular cycling race, the Paris-Dakar rally and the Paris Marathon.

Bwin will offer the brands in the Amaury Group its full range of online gaming products allowed by French legislation and services including payment, security and customer retention management.

Bwin said third quarter trading had been affected by the seasonal drop in activity in the sporting calendar but that the first weeks of fourth quarter trading had already shown a rise in betting activity as the sporting seasons got under way across Europe.

The company said it expected significant improvement in results in 2009, with gross gaming revenues reaching between €430m and €445m and adjusted earnings before interest, tax, debt and amortisation (EBITDA) of at least €100m, thanks to a reduction in operating and marketing expenses.

On the sports front, Bwin said the growing popularity of its live betting segment was shifting the turnover ratio from conventional sports betting to live betting, this resulted in lower sports betting margins for the company. With results being favourable to punters during the quarter, this meant a one percentage point drop in margins, or €6.9m below expectations. Bwin set future range for margins at between 7% and 9%.

Bwin’s poker network business was growing market share, the company said, but its own brands PokerRoom and EuroPoker had performed below expectations and the various different poker labels in the Ongame-Bwin network will be bundled into Bwin Poker during the first quarter of 2009 to benefit from the Bwin brand and improved cost efficiency.

Bwin said it expected significant improvements in results in 2009 thanks to its investment in technology, marketing and brand building. It will now enter a phase of consolidation and cost-cutting to achieve the 2009 results it has set itself. The cost cutting will reach €40m in operating and marketing expenses during 2009 and the company will focus on growing its existing markets while being less aggressive in its expansion strategy to increase cash flow.

Financial highlights revealed third quarter gross gaming revenues were up 11.2% to €95.9 million, compared with €86.2m during the same period in 2007, gross sports betting revenues rose 7.7% to €51m, compared with €47.3m in 2007. Sports betting margins dropped to 7.4%, from 8.5% during the third quarter of 2007.

Quarterly net gaming revenues were up 10.9% to €83.7m, from €75.5m in 2007 and adjusted EBITDA dropped to €9.6m during the period, compared with €15.2m last year. Bwin recorded a quarterly loss after tax €7m, compared with a loss of €5m in 2007.

For the nine month period from January to September, Bwin achieved a record rise in gross gaming revenues of 20.6% to €303m, compared with €251.3m during the same period last year. Gross sports betting revenues were up 26.7% to €170.9m from €134.8m in 2007 and the company enjoyed sports betting margins of 8.0%, compared with 8.4% in 2007.

Nine monthly net gaming revenues were up 18.1% to €263.6m, from €223.2m in 2007, adjusted EBITDA was down €3.7m in 2007 to €46m and the company made after tax losses of €2.7m during the period, compared with a loss of €0.8m over the same period last year.

November 19, 2008

Shuffling the cards: Math does the trick

Here’s the rule: To assure cards get sufficiently mixed up, shuffle a deck about seven times. Mathematician, magician and card shark Persi Diaconis of Stanford University, along with David Bayer of Columbia University, created shock waves in Las Vegas when he figured that out back in 1992. Most dealers had been shuffling much less.

But now Diaconis and his colleagues are issuing an update. When dealing many gambling games, like blackjack, about four shuffles are enough. The reason for the lower number is that many games require randomness for only a few specific aspects of the cards, not all. In blackjack, for example, suits don’t matter. Diaconis and his collaborators extended the earlier analysis to account for these variations.

Gamblers and casinos aren’t the only ones who will benefit. One the most useful tools for applied mathematicians — the Monte Carlo simulation — was inspired by the games of chance that are main attractions in Monte Carlo, Monaco. The new card-shuffling results apply directly to this method, promising to save mathematicians computer time.

Shuffling starts by cutting the deck roughly in half. During the shuffling, a few cards fall from one side, then a few from the other. Diaconis, Sami Assaf of the Massachusetts Institute of Technology and K. Soundararajan of Stanford University made the same assumption Diaconis and his collaborator Dave Bayer made back in 1992, that the cards are more likely to fall from the larger stack — an assumption borne out in real life.

Assaf started by using a very small deck, just four cards, and played with it a lot. Then she tried five, then six. From her experiments, she guessed a formula for how mixed the cards were, for whatever property she cared about. Then she worked out a proof.

The formulas she generated, though, were a mess. “We couldn’t actually calculate them,” she says. “We would have had to run the computer for 64 years or something like that.”

So she took each messy, complicated formula to Diaconis and Soundarajan, and for each they found a simple, easy-to-compute equation that approximated it. “We found a beautiful simple pattern,” Diaconis says. “There’s no reason this problem should have a nice answer. I’m not a religious person, but this is as close as I get.”

Previous researchers, specifically Mark Conger and Divakar Viswanath of the University of Michigan, had used computer simulations to work out some of these results. What makes the new approach from Diaconis and his colleagues stand out is that it can be applied to many different card games, using any number of cards. Even better, it can be used for situations far removed from cards, like Markov Chain Monte Carlo simulations, a technique that has revolutionized applied mathematics over the past few decades.

Markov Chain Monte Carlo simulations harness the power of randomness to solve all kinds of problems that don’t seem random at all. For example, prison officials once asked other mathematicians at Stanford for help decoding a collection of messages. The mathematicians guessed it had been made with a simple substitution cipher, where each symbol corresponded to a letter of the alphabet. The easiest way to solve substitution ciphers is by associating the most frequently used symbol with the most frequently used letter in English (e), the next most frequently used symbol with the next most frequently used letter (t), an so on. But that method failed.

The mathematicians then moved to the next level of sophistication, looking at the frequency of pairs of letters. They downloaded a copy of War and Peace and used it to build a table, showing the frequency with which one letter follows another. This table had 26 columns and 26 rows, and 26 times 26 equals far too many for deciphering by hand.

So the mathematicians used a Markov Chain Monte Carlo simulation. They built a simple program that chose a random letter to associate with each symbol. It then decoded the message using that substitution cipher and calculated how probable it was that the resulting pairs of letters in the decoded message would follow one another. It repeated the process with another random substitution cipher. If the new one was more probable, it picked it. If not, it usually kept the original one, but occasionally switched to the new one. After a thousand or so iterations, it had decoded the message — even though the message was written in a mix of English, Spanish and prison jargon.

One of the tricks is recognizing when the simulation can stop, and Diaconis’ new result for shuffling can help with that. Choosing a new random solution in a Markov Chain Monte Carlo simulation is a bit like a shuffle of the cards. The methods Diaconis has developed to recognize when a dealer can safely stop shuffling the cards can also tell when the computer can stop running the simulation.

“We’re all enthusiastic,” Diaconis says, “because you can describe it to your mom, the math is hard, and the results are interesting.”

November 16, 2008

Republicans Try to Tie Obama's Hands by Rushing in UIGEA Regulations

Congressman Barney Frank has written to US Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, asking them to postpone the issuing of regulations relating to the implementation of the UIGEA. Frank's letter comes in response to reports that the Bush Administration is trying to push through regulations to enforce the ban before President-elect Barack Obama takes office in January.

In his letter, House Financial Services Committee Chairman Barney Frank says: "I am deeply disappointed to hear that your agency is proceeding with what I consider to be unseemly haste in issuing regulations implementing the Unlawful Internet Gambling Enforcement Act. This midnight rulemaking will tie the hands of the new Administration, burden the financial services industry at a time of economic crisis, and contradict the stated intent of the Financial Services Committee."

Mr Frank urged Mr Paulson to "delay implementation of these major, and deeply flawed regulations to permit the incoming Administration the ability to review the consequences of such a significant policy decision, rather than unfairly being denied that opportunity."

The Bush Administration is said to be working to finalise the regulations at the last minute before they can be stopped by the new Democratic Administration, an orchestrated move being linked to a former National Football League lobbyist now working for the Republicans. The NFL has actively campaigned against online gaming and any clarification of the UIGEA and has opposed legislation introduced by Rep. Barney Frank to regulate the industry.

Last week Congressman Steve Cohen asked White House Counsel Fred Fielding to detail what role former lobbyist William Wichterman, now Deputy Director of Public Liaison, played in the Treasury's decision to send the proposed UIGEA rules to the Office of Management and Budget for final review on October 20th. In a November 7th letter to Mr Fielding, Mr Cohen said he had been told that Mr Wichterman "has been a source of considerable political pressure to speed this regulation through.''

Mr Wichterman recently left the law firm of Covington and Burling, which represents the NFL, to serve as a political appointee in the few remaining months of the Bush Administration.

"At a time when the financial system is in crisis, it is irresponsible for the Bush Administration to rush through a fundamentally flawed regulation that even representatives of the Treasury Department and Federal Reserve have stated on record is unworkable," said Jeffrey Sandman, spokesman for the Safe and Secure Internet Gambling Initiative. "We are sceptical of the Administration's motivation to get this done at the very last minute, especially given the apparent involvement of a NFL lobbyist turned Bush appointee."

The Bush Administration had previously made a commitment not to issue final regulations after November 1st 2008 except in "extraordinary circumstances." A delay in issuance of the final regulations was also expected given the September passage of the Payment System Protection Act by the House Financial Services Committee. The legislation would have delayed UIGEA implementation in order to develop regulations that do not harm the payments system.

"The Bush Administration is setting a horrible precedent of pushing through flawed regulations at the very last minute to deliberately circumvent the in-coming administration, leaving already struggling banks and financial companies to implement costly and poorly crafted regulations,” said Mr Sandman.

Representatives of the Department of the Treasury and Federal Reserve System had previously acknowledged the challenges U.S financial institutions will face in attempting to comply with UIGEA in testimony before Congress in April.
Since most payment systems are not designed to comply with this law, "it will be very difficult to shut off payment systems for use of Internet gambling transactions," said Ms Louise Roseman, Director, Division of Federal Reserve Bank Operations and Payment Systems, Board of Governors of the Federal Reserve System. "The implementing statute will not be iron clad at all."

November 15, 2008

Ladbrokes Goes Back to Court to Fight Norwegian Gaming Monopoly

Ladbrokes has said it will continue its fight to legally provide sports betting services in Norway as it launched an appeal against the rejection of its Norwegian sports betting licence application. The appeal comes after the Oslo City Court ruled last month that Ladbrokes was not allowed to offer its gambling services in competition with the Norwegian monopoly.
In 2004 Ladbrokes applied unsuccessfully for a licence to offer gambling services in Norway. The refusal to grant it a licence led Ladbrokes to initiate legal proceedings against Norway, claiming that it breached the Rome treaty, EC directives and the EFTA agreement.

In October the District Court of Oslo ruled against Ladbrokes and found the Norwegian law on gambling to be fully compliant with the EFTA agreement and European obligations. Ladbrokes was ordered to pay the Norwegian State's legal costs of NOK1.1 million.

John O'Reilly, Ladbrokes' Managing Director, Remote Betting and Gaming said: “We are appealing the judgement because the court's assessment of the evidence doesn't relate directly to our case. Vital aspects in the EFTA-law court judgment of May 2007 have not been taken into consideration, and the judgment is solely built on the national “slot machine case” of March 2007 which is not relevant to our application.

"The monopoly laws in Norway conflict with the EU Treaty, particularly with regard to the principles of freedom of establishment and the free movement of services. We continue to challenge for our right to be regulated in Norway and to provide free and fair competition to the monopoly."

Jan Magne Juuhl-Langseth, the counsel for Ladbrokes in Norway, added: “Ladbrokes have decided to appeal, particularly because the City Court has not assessed the Norwegian monopoly in the light of the guidance given previously by the EFTA-court in Luxembourg.”

“Just because a monopoly is considered legitimate by the Norwegian state, doesn’t make it right. We are looking forward to see our case being tested in the Court of Appeal," said Lasse Dilschmann CEO of Ladbrokes Nordics.

November 14, 2008

US issues final rule to implement UIGEA

The US Treasury and Federal Reserve yesterday issued the joint final rule to implement the Unlawful Internet Gambling Enforcement Act. It will require "US financial firms that participate in designated payment systems to establish and implement policies that are reasonably designed to prevent payments to businesses in connection with unlawful Internet gambling".

Companies have until 1 December 2009 to comply with the new rule.

The news comes days after Barney Frank, chairman of the House Financial Services Committee, called on US Treasury Secretary Henry Paulson to delay the issuing of the rule because of the lack of definition as to what constitutes unlawful internet gambling and the burden it will place on US financial institutions “at a time of economic crisis”. Republican lawmakers have been pressuring the Bush administration to implement these rules before leaving office in January next year.

Payments made through credit cards, electronic fund transfers and cheques will all be affected. According to the Treasury’s statement, “the rule provides non-exclusive examples of such policies and procedures and sets out the regulatory enforcement framework. For the purposes of the rule, unlawful Internet gambling generally would cover the making of a bet or wager that involves use of the Internet and that is unlawful under any applicable federal or state law in the jurisdiction where the bet or wager is initiated, received, or otherwise made.”

Frank said the administration of president-elect Barack Obama should be left to decide whether to implement UIGEA. He said: "This midnight rulemaking will tie the hands of the new administration, burden the financial services industry at a time of economic crisis and contradict the stated intent of the Financial Services Committee. Furthermore, some of the information needed to make this determination would likely be unavailable to banks because customers or financial institutions in foreign jurisdictions will likely be unwilling or unable to provide it."

While acknowledging that the new rule was more than a year late in being brought out, Spencer Bachus, Republican representative for Alabama, told Reuters: “No longer will the offshore gambling interests benefit from any turning any computer into a casino that is available every minute of the day."

Greek Police Raid Second Stanleybet Shop

Stanleybet has this morning confirmed that Greek police have raided the company’s second betting shop in Thessaloniki, arresting three customers as well as Stanleybet intermediary Theodoros Lazaridis on Saturday. This follows similar action taken by the Greek police last Thursday against the company's other sports betting shop in Athens.
All four persons arrested were charged with violating Greek sports betting monopoly legislation and held in custody overnight. However, the prosecutor, deviating from normal procedure, released them without subjecting them to a Court hearing and instead ordered a further investigation. Stanleybet said that the Greek authorities acted in 'direct contravention of EU law'.

Trading was interrupted as the authorities removed vital computer equipment which remains impounded.

Adrian Morris, Deputy Managing Director, Stanleybet International said: “This action, to arrest Mr Lazaridis and three citizens, is clearly contrary to established European law and ECJ jurisprudence.

“Furthermore we have a discriminatory situation where the Greek State is persecuting ordinary citizens who enter a shop to bet, without taking similar action against all those who bet online. It is now vital that the European Commission urgently addresses this unlawful behaviour and specifically pursues the outstanding infringement procedure.

“The decision of the Prosecutors to release everyone, without conducting formal indictment proceedings allows the re-opening of our outlet. This is a clear indication that the Greek authorities consider that our business model is legitimate under European law, and that there are flaws in the Greek’s own restrictive domestic legislation. The European Commission must act to ensure that an abuse of the rule of law does not continue.”

Last Thursday Stanleybet International intermediary Alexandros Vasdekis was arrested and later released without charge at the company’s betting shop in Athens.

Stanleybet International asserts that under Article 49 of the EU Treaty the company has the right to offer cross-border sports betting services. This right has been upheld by the European Court of Justice, most notably in the landmark Gambelli and Placanica rulings in which Stanleybet International was the substantive party.

Greece is one of ten European Union countries whose sports betting legislation is subject to infringement proceedings by the European Commission as being contrary to European law. Greece received a Reasoned Opinion from the European Commission in February 2008 that its monopolistic restrictions and penal sanctions in its sports betting legislation are inconsistent and disproportionate with EU law. The next stage is expected to be a referral to the European Court of Justice.

Ladbrokes' profits up 10% despite "challenging economic conditions"

Ladbrokes has revealed that group profit excluding telephone high rollers increased by 10% in the four months to 31 October, “despite challenging economic conditions.” Group gross win increased by 12% during the period.

Egaming net revenues increased 22% during the period, with strong growth across the sportsbook, casino and games, which the company said reflected its ongoing strategy of investing in new customer acquisition. The company said that poker performance “continues to reflect the highly competitive market”, and added that it was looking forward to joining the Microgaming network in the New Year.

UK retail gross win increased by 5%, with machine gross win rising by 14%, and the average weekly gross win per gaming machine rising to £677 compared to £586 for the same period in 2007. Over the counter gross win remained flat, “significantly impacted” by a run of poor results in the last two weeks of the period. Telephone betting net revenue, excluding revenue from high rollers, fell by 12%.

The company said the rate of shop openings in Italy, where it currently has 66 shops, has been slower than anticipated, but said it expected all to be fully operational by the year end. It added that the strike within the Italian horse racing industry which has been impacting recent trading has now been resolved. The company also opened an additional 20 outlets in Spain over the period, bringing Ladbrokes’ presence in the province of Madrid to 34.

Ladbrokes’ chief executive, Chris Bell, said, "Although a run of poor football and horse race results at the end of the period has affected performance, the group remains within the market expectation range for 2008."

Ladbrokes also announced that will shortly apply for leave, along with a group of bookmakers including William Hill and BetFred, to appeal against the ruling in its court case with Amalgamated Racing (AMRAC) and other parties, which alleged anti-competitive behaviour of the defendants in the course of creating Turf TV. The bookmakers claimed at the time of bringing the original legal action against AMRAC in September 2007 that the higher cost of providing Turf TV to their betting outlets compared to those under an arrangement with former supplier Satellite Information Services (SIS) was costing them an extra £50m a year.

Paddy Power on track with 2008 forecasts but economic pressures biting

Irish bookmaker Paddy Power is on track to achieve underlying operating profit forecasts for 2008 of €75m but said the deteriorating economic conditions in the UK and Ireland were having an effect on the group’s results.

In a trading update for the 19 week period from 1 July to 10 November, the company said it was responding by providing outstanding value and markets to customers and keeping a close rein on costs.

The online gaming channel’s contribution rose to over 60% of the group’s operating profit during the period. Online gaming gross win, the amounts staked less the amounts returned to customers as winnings, grew by 15%; the amount staked on online and telephone betting grew by 13% during the period. This was broadly in line with expectations after exceptionally high growth in the first half of 2008 against softer comparatives, the company said.
Turnover for Paddy Power’s retail outlets declined during the period, 9% in both Ireland and the UK in October. This was partly due to the firm’s competitive advantage of being able to show Turf TV pictures during the comparative period. Machine gross win in the UK grew strongly, with like-for-like growth of 22% during the period.

In accordance with the guidance Paddy Power gave in August and assuming a normal run of sporting results until the end of the year, the firm’s annual trading should translate into earnings per share growth of around 10% over 2007, notwithstanding the fact that sterling depreciation is expected to reduce operating profit by approximately €5m this year. The group has no debt and €72m on its balance sheet as of the end of October, “a position of excellent financial strength and flexibility in the current environment”, it said.

Paddy Power said its operating profit would drop by €9m-€10m in 2009 because the rate of betting tax payable on bets placed in Irish outlets will double from 1% to 2% from 1 January 2009.

November 12, 2008

Crypto surprises industry with Boss tie-up

CryptoLogic is to merge its poker network with Boss Media's International Poker Network (IPN) from the first quarter of 2009. CryptoLogic revealed a poker tie-up was on the cards with another platform recently when it announced that it would focus on its casino licensing business, leading to widespread speculation that PartyGaming would be the partner poker network.

The migration of its poker operations and customers to the Boss Media network is expected to generate savings for CryptoLogic of between US$12m and US$15m per year. Chief executive Brian Hadfield said the deal represented “a major step in our journey back to growth, profitability and returning shareholder value”, while Atul Bali, president of Boss parent company GTech’s New Media & Sports Betting, said the deal would deliver some much-needed liquidity to the networks: “We are delighted to welcome these customers and their players to our network and significantly increase the liquidity for our new enhanced player base," he said.

CryptoLogic poker licensees, including the InterPoker and Parbet brands, are on schedule to join the IPN in early 2009, St Minver, another GTech subsidiary, will provide a fully managed customer management solution to Crypto's poker licensees.

November 10, 2008

Potential West Ham sponsor in match-fixing prob

English West Ham United football club is in advanced negotiations with betting company SBOBet regarding an 18-month contract for shirt sponsorship worth around GBP 2 million.

Philippines-based SBOBet is one of the companies in the center of the Football Association's match-fixing investigation regarding the October 4 match between Norwich City and Derby County.

SBOBet have refused to cooperate with the FA and provide trading information related to the match, deeming such a move is an "excessive" breach of customer privacy.

The deal is due to replace the previous three-year shirt sponsor arrangement with XL, worth GBP 2.5 million per season, which fell through after one year due to the collapse of the company.

November 07, 2008

Stanleybet launches campaign for fair and open access to EU markets

Stanleybet International today launched its Fair Play For Sports Betting campaign, calling for fair, open and equal access to all European markets for all EU-based sports betting operators.

The campaign was launched at the European Parliament with an open letter from the campaign’s director, Adrian Morris, to the president of the European Commission, calling on Jose Manuel Barosso to prevent member states "further delaying, through political manoeuvring, the opening of their sports betting markets and to enforce compliance with the principles of EU law."

In the letter, Morris highlights several member states’ current non-compliance with the European Court of Justice’s 2003 ruling in the Gambelli case, which recognised the right of a sports betting operator legally established in one member state to provide those services in another. The Gambelli ruling was widely seen as the first step towards a level playing field for both state-owned or controlled and private sports betting operators.

“Member states continued to act in an unfair, disproportionate and politically motivated way and to deny their citizens access to competitive betting services”, said Morris. “Rather than following European law, they are seeking to opt out of it. The European Commission, as the defender of the EU Treaty, has not only the legal right to intervene, but, more importantly, the duty to do so,” he added.

Potential supporters can find out more and register at

Sportech profits dip; distribution agreements to drive continued growth

Sportech has announced in a five-month trading update that it anticipates full-year pre-tax profit for 2008 to dip below current market expectations due to the cost of launching its online football business and the migration of its non-football content to the 888 platform.

However, the company said the figure would represent a considerable increase on last year’s performance, and said it was confident of building on the “significant progress” made over the five-month period from July to September 2008, which saw the company become a net recruiter of customers “for the first time in recent history.”

Having recruited more than 15,000 customers to its online football business in the 11 weeks since the start of the football season, the company said it expected this trend to continue next month when a selection of its games goes live across the Ladbrokes betting shop estate, and from January 2009 to the 4.9m registered customers of

Looking ahead, the company said that with “many of the challenging operational and financial initiatives completed”, it believed its position “as a high-volume, small-value ticket gaming business” placed it in on advantageous footing to weather any economic downturn.

The company also announced today that it had undertaken a “strategically important” acquisition of football community website for £600,000, with the aim of using the site to cross-sell and market the full suite of Sportech football games.

November 04, 2008

Manchester United optimistic about future sponsorship

David Gill, chief executive of English Manchester United, is assured that the club will be able to land a sponsorship contract in 2010 that will measure up to the shirt deal with AIG, worth GBP 14 million per year. "There are still some very successful, profitable, growing companies around the world," Gill told PA.

Manchester United has already acquired four profitable sponsorships in less than a year, the most recent being Hublot, Swiss watchmaker.

The four-year contract with AIG has reached its third year, and is continuing despite the financial institution's need of a rescue from the United States Government as a result of the credit crisis. Renewal of the deal is unlikely, which means United will be seeking new shirt sponsors in 2010.

AIG will be settling the outstanding funds owed to the club beyond the expiration date of the contract, Gill explains.

Manchester United owe GBP 666 million, which means that should the club under-perform or lose a sponsor, they could enter a financial hardship. According to Gill, the addition of new players, such as Dimitar Berbatov, ensure that the situation won't come to that.

The club believes that football is still an attractive investment opportunity.