32Red Continues Convalescence on Strong Casino Performance

9 March 2009
One year after reporting annual losses of £12.8 million on a costly, unsuccessful run with Betdirect, 32Red revealed net profits of £1.26 million for the 2008 fiscal year.

Total net gaming win came in at £12.9 million, up 26 percent versus 2007. Casino, the company's core product, generated net win of £11.7 million, up 30 percent year over year.

Metrics across the casino business were positive: active players were up 14.8 percent; new players were up 6.7 percent; yield per active player was up 13.3 percent to £537; and cost per acquisition was down 13.1 percent to £119.

Player acquisition costs are expected to rise in 2009, however, as the company looks to enhance brand awareness offline. Its shirt-sponsorship deal with Aston Villa F.C. of the British Premiership ended last May, cost savings from which helped lower the 2008 C.P.A. metric relative to 2007.

Like other operators in the listed sector in 2008, 32Red reported its poker business had declined, with net win down 13 percent to £1.05 million.

Because Monday was a bank holiday in Gibraltar, the company's chief executive, Edward J. Ware, could not be reached for comment regarding a potential sale of the poker business.

Current trading levels in poker were "mildly encouraging," Mr. Ware said in the results statement, but added that the company "continues to evaluate all aspects of the 32Red Poker experience in the face of competitive conditions."

Reading across to Sportingbet's second-quarter results last week, Chief Executive Andrew McIver said his company had no intention of selling its poker business. Even though the business hasn't fared particularly well of late, he said, it remains a low-cost vehicle by which customers are cross-sold to other products.

For the first time, meanwhile, bingo appeared as a line item in 32Red's results. The product, which launched in early 2008, generated net win of £200,000 -- a performance Mr. Ware called "relatively pleasing."

"Key to Bingo revenues will be the continued development in the offering of casino games in our Bingo environment," he said. "This allied with further TV advertising in the UK and the launch of new initiatives will deliver further new income for 32Red in 2009."

The company just launched a spread betting product and has designs on launching a new sportsbook imminently, though further details on the sportsbook were not provided.

Current trading is encouraging, the company said, and in line with market expectations.

Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.