Cherry Increases Stake in Betsson

22 June 2004

Swedish I-gaming and I-gaming solutions company Cherryforetagen AB has announced that it will invest another 2.1 million euro in U.K.-based sports betting exchange Cherry acquired 10 percent in 2003, and the new investment amounts to 17.3 percent. It also has an option to buy the remaining shares.

The acquisition comprises a 1.5 million euro cash acquisition of new shares and a cash-and-shares acquisition of existing shares from shareholders.

"Cherry is investing in because we see a fantastic possibility to create an open marketplace where other gaming sites can become members and offer their customers the betting exchange functionality," explained Cherry President and CEO Pontus Lindwall. "Cherry's subsidiary, Net Entertainment, has a huge client list of sports books and poker sites who are using the product 'Casino Module,' and they are potentially customers for the new product which we are about to create."

Lindwall said turnover from betting exchanges in 2003 was approximately US$16 billion, and he expects this figure to shoot up to $159 billion by 2008

Cherry, also established in Norway, Denmark and Chile, was founded in 1963 by Lars Kling, as a traditional gaming and support company. The company now invests heavily in electronic media and develops new technologies for gaming, competitions and lotteries, all based on the Internet and mobile Internet.

Lindwall said the total annual growth for online gaming is 30 to 40 percent, which represents a good potential for strong growth. And the next commercial breakthrough, he predicts, will be in mobile gaming.

In Denmark, Cherry has begun a major joint initiative with Danska Shell, whereby Cherry is setting up gaming environments at a number of large gas stations. The group also operates maritime casinos. was established Feb. 19 and quickly became Scandinavia's leading betting exchange. According to Betsson's 2003 annual report, the company matches bets amounting to more than SEK 1 million (US$132,000) every day and is showing a monthly growth of approximately 30 percent.

Betsson's betting system ensures that all bets are honored, as all funds deposited by clients are held at client funds accounts with Barclays Bank and the Scandinavian SEB bank. All information on the service is encrypted by VeriSign SSL (Secure Socket Layer) and supervised 24 hours a day, seven days a week.

Cherry's 2003 Financials

Net Sales: SEK 265.3 million (US$35 million), compared to SEK 271.1 million in 2002. Corrected figures for the closed-down gaming machines increased net sales by 15 million SEK.

Profit after Financial Items: SEK 0.6 million (US$79,000), compared to SEK 0.0 million in 2002. Corrected figures for the closed-down gaming machines increased profit by SEK 19 million.

Profit after Tax: SEK 1.5 million (US$198,000), compared to SEK -0.9 million in 2002; SEK 0.05 per share, compared to -0.04 per share in 2002.

Equity/Assets Ratio: 63 percent, compared to 65 percent in 2002.

Cash and Bank Balances: SEK 331.8 million (US$43.8 million), compared to SEK 31 million in 2002.

Rob van der Gaast has a background in sports journalism. He worked for over seven years as the head of sports for Dutch National Radio and has developed new concepts for the TV and the gambling industry. Now he operates from Istanbul as an independent gambling research analyst. He specializes in European gambling matters and in privatizations of gambling operators. Rob has contributed to IGN since Jul 09, 2001.