October 06, 2010

Real-time betting boosts Sportingbet

The growing popularity of placing wagers on sporting events as they occur helped drive revenues up by 27 per cent this year at online gaming group Sportingbet.

In-play, or “real-time” betting, expanded to account for 61 per cent of revenue from sports-related wagers in Europe, said the Channel Islands-based company, which derives most of its income from sports betting.

The World Cup boosted the amounts of money customers wagered – which rose by a quarter across the group in the year to August 31 – and Sportingbet’s margins, thanks to several favoured teams losing matches. August and September saw continued healthy trading.

“Net gaming revenue for the first two months [was] up 17 per cent on the same period last year,” said Andrew McIver, chief executive. “Whilst the economic outlook remains challenging, our spread of activities across different economic cycles of Europe, Australia and South America gives us confidence for a year of further success.”

In non-sport products, poker revenues fell from £18.8m last year to £17.4m – a decline that reflects market trends.

Pre-tax profits for the year were £6.9m, down from £22.3m in 2009, after the group agreed to pay a one-off $33m (£22m) settlement to US authorities for having illegally provided online gambling to US-based customers.

That settlement has cleared the decks for potential M&A activity. “Management has built credibility following the exit from the US in 2006 [when the Unlawful Internet Gambling Enforcement Act was passed], settled with the Department of Justice, moved to the main market and also started paying dividends,” wrote analysts from Liberum capital in a note on Wednesday. “We see M&A as the key upside in the shares.”

Many industry-watchers have been predicting a spate of consolidation since Sportingbet rivals PartyGaming and Bwin agreed to merge this summer.

Before exceptional items, a share option charge and amortisation, Sportingbet’s operating profits for the year beat expectations, rising £4.3m to £35.4m on revenues that were £44m higher, at £207.5m. Diluted earnings per share fell to 0.7p from 2.4p a year earlier.

The group said it would pay a final dividend of 1p, bringing the year’s total to 1.5p, compared with 1p a year earlier.

Shares in Sportingbet rose almost 2 per cent in early trading to 80.55p

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