Sportingbet - a bright spot in a disappointing week for online gambling stocks

14.10.2005

Top British online gambling group Sportingbet brought a breath of fresh air to the week's pessimism over Internet gambling prospects when it announced it's results mid-week.

The group, which includes online poker giant Paradise Poker among its companies shrugged off the collapse in confidence in the future of internet gambling, the UK business press reported, by posting a fivefold increase in profits and a 50 percent rise in the amount of gambling by its customers.

Referring to the market pessimism, which started with a comment from the Party Gaming CEO that the poker market was slowing down Sportingbet chief executive Nigel Payne said: "The whole thing has been overblown. From where I am standing, volumes up 50 percent this year after being in business for seven years is something any company in any industry in any part of the world would want.

"Our poker rake is up 71 percent year-on-year and 22 percent quarter on quarter. That is is not a slowdown."

Sportingbet, whose shares have fallen a fifth in a month, has been caught up in a GBP 5 billion sell-off of internet poker room and cyber casino stocks, which has seen some companies halve in value.

Sportingbet's pre-tax profits were GBP40 million in the year to 31 July. Almost half of that came from its poker operations at Paradise Poker.com acquired last year, with underlying profits from its sports betting business up 54 percent.

Payne claims that his 'multiproduct' business model works better than poker-only or casino-only websites.

He said: "The scale of the group's operations has increased significantly.

"We now have over 2.7 million registered customers who placed 400 million sports and gaming bets in the year - up 51 percent - and generated an 89 percent increase in the daily poker rate." He added that the trend had continued in the first months of the new financial year.

The average number of games played each day on Sportingbet's Paradise Poker site rose 66.3 percent in the year to July 31, while the cost of attracting each new player to Paradise Poker rose by $10 (GBP 5.74) to $139.