Betsson Bulls Undeterred by Turkish Exposure

With Sportingbet having significantly reduced its dependence on the Turkish market, Betsson A.B., by contrast, said on its fourth-quarter results Friday that operations there are going strong.

Pontus Lindwall, the company's bespectacled, bullish chief executive, said at a Stockholm analyst presentation that although the online environment has become more competitive in Turkey, Betsson doesn't "fear any competition there."

The company’s largest market remains the Nordics, from which 53 percent of its gross profits are derived, though dependence on that market fell from 69 percent a year ago. Meanwhile, the company’s dependence on a region it identifies as “rest of Europe,” which includes Turkey, grew from 18 percent to 35 percent, year over year.

While most companies in the listed sector are loath to discuss details of their Turkish doings -- past or present -- the market has proven a curious but nettlesome one.

A brief review: Firms like PartyGaming and Neteller discontinued serving Turkey in spring 2007 after the country’s Legislature enacted prohibitive legislation targeting operators and their agents; Bwin, which also left Turkey, lost (and, in court, is trying to recover) a couple million euros it paid to a local security consultancy in an attempt to secure an Internet betting license; and Sportingbet had two employees arrested then jailed in Istanbul under juridically suspect circumstances.

Assuming the company’s primary competitor in Turkey was Sportingbet, it’s no wonder Betsson is gaining market share. In fact, “rest of Europe” generated 64 percent more income than it did in the previous quarter. Moreover, active customers -- which are not segmented geographically -- were up 11 percent, quarter on quarter.

Buyers of Betsson Friday were not troubled by the company’s exposure to Turkey -- the stock rose nearly 16 percent -- and were likely cheered by news that the fourth quarter was its largest ever.

Group revenue rose 69 percent to 321.1 Swedish kronor, or about $38.3 million, while gross profits rose 77 percent to 258.6 million Swedish kronor. Net income was 92.9 Swedish kronor, up 115 percent.

Year over year, casino came in at 146.5 million Swedish kronor, up 104 percent; poker, 41.2 million Swedish kronor, down 14.3 percent; sportsbetting, 61.7 million Swedish kronor, up 226 percent; and other products, 9.2 million Swedish kronor, up 318 percent.

For the full year, group revenue rose 60 percent to 1.03 billion Swedish kronor, or about $123 million.