The yearly fiscal report is out for Sportingbet PLC and the results for the publicly traded gaming company were generally positive. Sportingbet, the parent company of online poker room Paradise Poker, saw growth in net revenue, earnings, money wagered, and profit thanks in part to a focus on emerging online gambling markets. While the sports betting and casino ventures have been on the rise for the company, it appears as though it is paying less attention to its poker holdings, which saw a decline in earnings from 2008 to 2009.
Sportingbet, which is publicly traded on the London Stock Exchange under the symbol “SBT,” saw its net gaming revenue jump to £163.6 million from £144.3 in 2008, an increase of 13%. Profits saw a 26% increase as well, coming in at £31.1 million thanks to more than £1.5 billion wagered on the site over the course of the year. Last year, the company received a total of £1.35 billion in wagers. The company’s Chief Executive, Andrew McIver, commented on Sportingbet’s performance in the official audited results through July 31st, 2009:
“This has been a very solid year for the Sportingbet Group. We are now seeing consistent profitable growth resulting from the structural changes made following our withdrawal from the U.S. Our focus on sports betting and geographical diversification is helping to support earnings in these troubled economic times. Additionally, our commitment to offer industry-leading sports betting products and excellent customer service has helped us to recruit and retain core customers.”
The diversification McIvan spoke of includes launching versions of the site in Romania and South Africa as well as moving into other emerging markets like Canada and Brazil. While the company continues to struggle against stiff competition in Britain, its efforts in Eastern Europe have been much more successful. Sportingbet blamed the global recession and an expensive and over-saturated media market for its performance in the U.K., but its results in Eastern Europe more than compensated for its 21% decline in the British Isles. The Eastern European revenue for Sportingbet grew by 26% and now accounts for more than 15% of the company’s total revenues—more than the entirety of its online poker operation. The company attributed some of its success in that region to a launch of more than 90 Flash-based casino games.
The company saw several other changes this year as a number of national governments addressed the issue of online gambling via new laws, regulation, and licensing. The company noted, “Regulation continues to define the internet gambling industry across Europe and the rest of the world. In general, we continue to see pressure on European countries to justify their national gambling regimes in light of the free-trade requirements of international law.”
Sportingbet took a pro-regulation stance on the issue and representatives of the firm are continuing to meet with a number of national regulatory bodies, including the U.S. Department of Justice, to discuss Sportingbet’s legal standing. Sportingbet and Paradise Poker do not accept U.S. customers, which has resulted in a steady decline in revenue for its online poker venture since the site’s withdrawal from the American market following the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA).
In Europe, Paradise Poker’s revenue is down 7.6% from last year, bringing in only £22 million of the company’s total earnings. The poker branch of Sportingbet used to be a major component of the company’s holdings, but it now represents only 12% of total revenue. The company attributed its struggle in the online poker market to a high level of competition, “with certain large U.S.-focused poker companies using their significant cash flows and high liquidity to continue to attract customers from existing European only companies.” This is a similar complaint to the one voiced by Party Gaming executives in its mid-year report, which was released last month.
Sportingbet is currently traded on the Alternative Investment Market (AIM) of the London Stock Exchange, but the recent report revealed that the company would try to move to the General Equity Market in the near future. At the close of trading on October 14th, Sportingbet stock was fetching $76 per share.
