Net loss for Sportingbet but Australia flourishes
CEO Andy McIver says it has been a "transformational" year for the online operator - Foxwoods deal "on back burner".
Sportingbet’s acquisition of Australian bookmaker Centrebet last year has produced better than expected results, with an increase in amounts wagered on sports of 82%, the company has announced in its financial results for the year ended 31 July 2012.
Overall, the operator reported an operating loss of £39.1m for the year, citing exceptional costs of £71.6m including expenses related to the acquisition and integration of Centrebet, its settlement with the Spanish tax authorities and costs arising from exiting the Turkish market.
And as economic difficulties in Europe stunt growth for Sportingbet in the likes of Greece and Spain, its two largest markets, a strong performance from the Australian business in the past 12 months has proved invaluable.
The operator is now the country’s leading fixed odds internet and phone bookmaker by amounts wagered, which grew to £1.49bn from £822m in 2011, leading to post-betting tax net gaming revenue (NGR) of £82m, up from £37.2m last year.
Sportingbet’s Australian business was at the centre of a £350m joint bid by William Hill and GVC last week. Hills, which pulled out of Australia earlier this year in order to smooth its path to licensing in Nevada, is aiming re-enter the growing market through the acquisition.
With Hills also keen on Sportingbet’s locally licensed businesses including Spain, a successful bid would see GVC assume control of operations in all other non-regulated territories. The offer was turned down however it is expected to be improved before the 16 October deadline.
Some 80% of Sportingbet’s revenues are now derived from regulated markets, and Andrew McIver, the operator’s group chief executive, told eGR this morning: “It has been a transformational year and probably the most so since we dropped out of the States back in 2006. With many countries across Europe starting to regulate, we have for the first time been able to choose which markets to operate in.” McIver refused to comment on the Hills-GVC bid.
However speculation over a Hills-GVC takeover bid has delayed plans to finalise its deal with Conneticut casino Foxwoods. The agreement was “ready to be announced” at this week’s G2E conference in Las Vegas with “just two signatures needed” to finalise the deal, according to McIver.
The exclusive partnership would see Foxwoods integrate Sportingbet’s open B2B gaming platform enabling it to source third party content from the likes of IGT, Bally, GameAccount and WMS. Foxwoods would then be responsible for marketing and licensing the platform to other operators in the US, with a focus on Native American tribes as well as commercial casinos.
“We’ve all put a lot of time and effort into the deal, but it has been put on the backburner for now given the speculation, as Foxwoods quite rightly wish to know who they will be dealing with going forward,” he said.
Sportingbet’s shift to regulated territories included the disposal of its Turkish and Norwegian businesses, while it continues to derive strong revenues from “wait and see” markets such as Greece and Bulgaria where it is market leader.
However, amounts wagered on sports betting in Europe and emerging markets fell by 31% to £814m, down from £1.17bn in 2011, resulting in NGR falling 44% year-on-year. On a like-for-like basis European sports NGR was down 12%, reflecting the difficult economic conditions across the operator’s main European markets.
Casino and gaming contributed a further £34.5m, and poker £7.6m, to both amounts wagered and NGR, down from £44m and £13.3m respectively in 2011.
Synergies from the Centrebet acquisition proved easier to come by, with Sportingbet able to drive greater efficiencies than expected, including the migration to its proprietary owned IT platform for both the website and the mobile products, and increased personnel efficiencies. “We overestimated how efficiently run Centrebet was,” says McIver. “They were over engineered.”
The original estimate of the synergies was £9.8m however the final level of synergies obtained were £15m, equal to around one third of Centrebet revenue.
At acquisition the combined headcount of the two companies in Australia was 341 with Centrebet having 225 staff. After the full integration of IT and restructuring of all departments, Sportingbet Group Australia now comprises 216 staff in total.