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US ban on online gambling forces Sportingbet to exit

by Poonam Wadhwani - October 13, 2006 - 0 comments

Britain's Sportingbet Plc, one of the world's largest e-gaming operators, has sold its US sports betting and casino businesses for $1, just before a day the US government is likely to enforce a law banning online gambling.

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[quote=Poonam Wadhwani]<div class="flexinode-body flexinode-1"><div class="flexinode-textarea-1"><div class="form-item">
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 <p>Britain's Sportingbet Plc, one of the world's largest e-gaming operators, has sold its US sports betting and casino businesses for $1, just before a day the US government is likely to enforce a law banning online gambling.</p>
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 <img alt="US ban on online gambling forces Sportingbet to exit" src="http://www.themoneytimes.com/filess/ONline Game_sm.jpg" /><br /><a href="http://www.themoneytimes.com/filess/ONline Game.jpg">Get original file (12KB)</a>
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 <p>The online gaming firm has sold its US betting and casino operations to Jazette Enterprises Ltd. for the nominal sum of $1. “Sportingbet received cash consideration of $1 for the shares and related assets of the US operations, and has discharged excess liabilities amounting to approximately $13.2 million,” the company, which has been reviewing its US business since its former chairman Peter Dix was arrested in September, stated.</p>
<p>The sale relieves the London based company of $27.2 million in liabilities and estimated closure costs.</p>
<p>The company considers the arrest of Mr. Dix as part of a series of attempts made by US authorities trying to discourage online gambling operators. “We are saddened to have to dispose of such a fantastic business as a result of political actions in the US Congress,” Sportingbet Chief Executive designate Andy McIver said on Friday.    </p>
<p>What forced the owner of Paradise Poker to take exit from US is a legislation passed by Congress on Sept. 30 to outlaw online gambling in the U.S. President George W Bush is likely to sign the measure into law later on Friday.    </p>
<p>Sportingbet operates over fifty different brands, mainly local-focused sportsbooks plus bingo and casino sites, and the third largest online poker cardroom, Paradise Poker. All around, the company has more than 2.5 million registered online betters in 200 countries, who place over one million bets (casino, poker, sports and virtual games) each day.</p>
<p>Until its sale, for US online sportsbooks, Sportingbet operated several large websites. They also used a system similar to a franchise, in which local website operators used Sportingbet's centralized software, financial services, grading, and customer service under license. These web sites received a cut of the profits their customers generate.</p>
<p>Sportingbet has sold the Sportsbook.com to Jazette Enterprises Ltd and Sportsbook will operate as a private company with offices in Dublin, Antigua, Vancouver and Costa Rica.    </p>
<p>Sportingbet said, it would now focus on developing its business in Europe and Australia. The gaming firm further said that it will retain its Paradise Poker site, but will stop accepting US cash later on Friday. </p>
<p>“Had the business been closed, the board estimated that the cost of severance and closure would have amounted to approximately $14 million -- a total saving of circa $27.2 million,” the company said.    </p>
<p>Sportingbet shares were today up 7.7 percent at 70 pence ($1.30) in morning trading on the London Stock Exchange.</p>
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