Casino Is King for 32Red

27 August 2008

32Red, the Gibraltar online operator, continues to right the ship following last December's timely sale of Betdirect, having logged a strong first half on growth in its flagship casino business.

Casino revenue came in at £6 million -- out of total revenue of £6.6 million -- up an impressive 31 percent over the comparable period last year, and 38 percent against the previous half.

"The strong growth in the 32Red casino has been driven by both increased active player numbers [12,283] and an improved yield per player [£491]," Edward J. Ware, the company's chief executive, said in a prepared statement.

Growth in poker revenue, however, did not compare favorably to casino, coming in at a stagnant £600,000 -- a number that has remained unchanged since the first half of last year.

"One of the problems possibly may be that, in the territories we market to, everybody who wants to play online poker is probably playing it," Mr. Ware told IGamingNews in a telephone interview Wednesday. "Without new customers coming into the market, you could say that the growth potential is limited.

"I think that has to be proved yet, but no doubt balance is very tough for all operators, particularly in Europe -- as you'll see," he continued sarcastically, "the two big guys at the top of the list, PokerStars and FullTilt, are merrily winding their way through the U.S. market and doing very nicely, thank you."

Despite the wider slowdown in European poker, the year is looking up for 32Red, which continues to recover from full-yearly losses of £3.2 million and £12.9 million during the 2006 and 2007 fiscal years, respectively -- losses which were primarily attributed to Betdirect.

After a difficult 18 months with the loss-making bookie, which it offloaded to Stan James Gibraltar Ltd. for £5.75 million, Mr. Ware said that, going forward, the company intends to direct much of its effort toward its casino offering.

Of its three newer product launches -- a French-language online casino, bingo and mobile -- he called bingo the "most exciting" as the company, via a televised ad campaign in the United Kingdom, has brought in "lots of new players."

Metrics for bingo, he said, will be available on the company's full-yearly results.

By market, Mr. Ware said the United Kingdom will continue to be 32Red's brand of choice -- "We know the price of eggs there, and there's no chance of me being arrested when I land at Gatwick Airport" -- but said that, curiously, the company was now receiving roughly 5 percent of its revenue from Japan.

Total gaming revenue was up 32 percent over the previous half, with earnings before interest, taxes, depreciation and amortization up 13 percent to £1 million.

The results, which received a "buy" recommendation from Numis Securities in London, have gone over well with the market. Shares today rose 1.35 pence, or 5.14 percent, to 27.60 pence.

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