Brighter News from Sportingbet
December 1, 2008 (InfoPowa News) — Online gambling group Sportingbet's belt-tightening has started to deliver results, with a brighter first quarter report that shows a pretax profit of £4.9 million, net gaming revenue growth up 28 percent to £38.9 million, and sports betting net gaming revenue growth of 34 percent.
Operating profit was up by 45 percent to £6.1 million, and the group had net cash of £19.5 million at quarter's end. A further £22.3 million is held in liquid assets.
Group CEO Andrew McIver said, "Performance during August, September and October has provided a solid start to the new financial year. As the business enters its busiest two quarters, our focus will continue to be on the provision of quality and value sports betting services to a globally diversified customer base. This core revenue stream will continue to be supplemented by our additional casino, poker, and games offer.
"Whilst sports betting has historically shown itself to be 'recession hardy', no industry is 'recession proof'. Unfortunately there is also no empirical data with regard to the online casino and poker industry to estimate what the impact of an economic downturn may or may not be on these products. That said, customer metrics remained very robust both during the quarter and in the four weeks since it ended. As such, the Board remains cautiously optimistic in achieving the Group's full-year forecast."
McIver also revealed that the company has plans to grow sportsbook revenue through a focus on live streaming of sporting events for its key markets. The company launched its live streaming on 29 October 2008 and raw data has so far showed an increase of between 5 percent and 10 percent in total gaming revenues.
Finance director Jim Wilkinson said the company suffered an initial drop in margins on in-running betting, but those margins had "recovered to the previous levels as we increased the number of markets we offered in-running".
Sportingbet also reported a 25.4 percent rise in gross win to £364.9 million. The group reported a pre-tax profit of £4.9 million, compared with a loss of £1.4 million for the three months to October 2007.
European NGR from sports betting was up 19 percent on the previous year, McIver reported, while the Australian business saw an impressive 97 percent growth, almost doubling to £7.1 million for the quarter due in part to the relaxation of advertising restrictions in new South Wales and Victoria.
Online casino activities saw NGR increase by 34 percent, helped by a strong flow of customers cross-marketed from the Sportingbet sport sites. The industry trend toward weaker poker action was reflected in Sportingbet's online poker results, with NGR down 4 percent as a result of having to exclude U.S. poker action. Talks with the U.S. Department of Justice were progressing, according to finance director Wilkinson.
Spanish, Greek and Eastern European markets all delivered positive growth, but the group continued to struggle in the U.K. and Italy due to overservicing of the markets and expensive media environments. Sportingbet's overall margins in its European markets are around 10.7 percent, and those experienced during the live streaming of sports events were 9.4 percent, Wilkinson revealed.
Perhaps predictably after recent run-ins with the authorities there, the results from the Turkish market were poor — NGR fell 42 percent as the group downsized its operations in that country. On the positive side, the company has plans to launch sportsbetting in the regulated South African market.