(Chris Tryhorn – source: http://business.guardian.co.uk/story/0,,1961327,00.html)
Online gaming company Sportingbet revealed the full cost of its withdrawal from the US yesterday, recording a charge of more than £250m for costs associated with its discontinued operations.
The company said the £252.4m charge – higher than previous guidance of £210m – had pushed it into a first-quarter loss of £241.4m, compared with a £14.3m profit in the same period a year ago. Andrew McIver, chief executive, said the charge could widen by the close of its financial year in July 2007, describing the latest figures as “our best estimate, not cast in stone”.
Sportingbet sold its US operations in October ahead of an eleventh-hour ban on internet gambling passed by the US senate and then enacted by President Bush. Its executives are still staying clear of the US for fear of arrest. Mr McIver said the ban had been a “travesty of natural justice” and said he saw little hope it would be reversed. He said the British government had neglected the UK gambling industry over the ban. “You would have hoped that the government would have recognised this as an industry employing UK nationals and listed in the UK, and that they would have supported it, but that turned out to be very naive,” he said.
Sportingbet said the cost of pulling the plug on the US business included a £132.7m writedown on its investment in Paradise Poker. The US accounted for 80% of revenues at Paradise, which was acquired for £186m two years ago and is now valued at £50m. The exceptional charge also reflected a £106.3m loss on the disposal of Sportingbet’s US sports betting and casino business and £13.4m in restructuring and other costs. Some 450 of the group’s 800 employees lost their jobs as a result of the exit from the US.
Sportingbet is among a host of London-based online gaming firms stung by the US crackdown. The company’s former chairman Peter Dicks was arrested in New York in September at the request of the state of Louisiana, though he was not extradited. The company is now worth just a tenth of its £2bn market value earlier in the year. Gross profit was up by 48% to £31.7m in the three-month period ending on October 31.
(from Casino-Bingo – Betting sites & Sportsbooks reviews…)