A little more than a year after purchasing ukbetting.com and its online bookmaking system, the English investment firm of ENIC is selling its stake in the company to Eric Semel and his ukbetting plc, a company that was formed with the intention of buying the online subsidiary.
Although ukbetting.com had losses before taxes of approximately £457,000 and the company was bought in May of 2000 for £500,000, ENIC is unloading the company in a deal that could bring in £5m.
Terms of the deal call for an initial payment of £1.5 million in cash and £1.5 million in shares of ukbetting plc and a further amount to be paid (depending on performance) of up to £3 million, (also to be satisfied in equal proportions of cash and shares of ukbetting plc).
Also as part of the deal, ukbetting plc announced its intention of floating shares on the Alternative Investment Market (AIM) in hopes of raising an additional £6-7 million.
Semel, a former executive with the Mirage and Bellagio casinos in Las Vegas, is planning to have the company listed on the AIM sometime in August. Proceeds of the float will go towards expanding the company's operation into Europe and Asia. Semel said the capital will help his company expand its business with technological advancements and promotion through interactive TV and mobile devices.
ENIC, an investment firm that specializes in sports and media companies, unloaded the online bookmaking company in favor of a quick profit off a company that was unable to make its own profit despite having more than 8,000 customers and revenues of more than £7 million. ukbetting.com currently has wagering on horse racing, football and sports betting.
Semel is confident the new ukbetting.com will be able to turn a profit before too long. He points to numbers released by the Gaming Board of Great Britain, which predict the online sports betting market (excluding horse racing) will account for 43 percent of the total 2001 £21 billion worldwide online gambling market. That represents 1.14 percent of total gambling turnover in 2001.
ukbetting plc is led by an experienced senior management team including Semel and Peter Dubens and non-executive directors Alex Berger (ex Canal+ and Vivendi), Tony McAuslan (CEO of Next Generation Gaming) and Dr. Hans Wagner. Beeson Gregory is acting as nominated adviser and broker for the placing.
Semel is banking on his experience during his Vegas days to help turn the new venture into a money-making machine.
"During my five years spent working in some of the most well-respected and successful casinos in Las Vegas, I utilized many effective marketing techniques," he said. "ukbetting should benefit from the use of these marketing methods to maintaining customer loyalty in the digital wagering marketplace."
Building the ukbetting brand, according to Semel, will be the company's main focus, more than just marketing the site.
"Gambling operators have traditionally spent 10 to 15 percent of turnover on advertising without resulting in customer loyalty," he said. "With this in mind, ukbetting's business model will change to see a significant decrease in advertising spent and more focus on the company's strategy of building customer loyalty. Through significant partnership deals and the use of new technology ukbetting aims to create a world-class digital wagering operator. The funds raised will enable us to accelerate this process and take advantage of the major opportunities in the £580 billion worldwide gaming industry."