Eye on Europe - Jan. 15, 2007

15 January 2007

Intralot and New Licenses -- Eurocorp Securities has upgraded the share target price for Intralot to 23.50 euro from 22.50. This comes after the Italian government awarded Intralot licenses for sports betting retail outlets as well as "remote" licenses for Internet and telephone gambling. Nevertheless, based on Eurocorp's ratings system of absolute expected returns on a 12–month horizon, Intralot maintains a "reduce" rating. The company can open 416 betting shops and install 164 betting terminals throughout Italy. It also acquired nine licenses for exclusive horse race betting as well as licenses to distribute sports and horse racing via the Internet. The duration of all licenses is nine years, while the total investment stands at 65 million euros (which we assume is all expensed in 2007). This project will be undertaken by a new subsidiary (of which Intralot owns 85 percent), which has been established for this purpose. All sports betting points of sale will be operating by the end of 2007; they will account for only half of the year's revenues, as not all of the outlets will open at the beginning of the year. Additionally, Eurocorp expects Intralot to capture a 29 percent share of the 2 billion-euro market (which is expected to grow at a 10 percent rate) and enjoy a 9.5 percent EBITDA margin. Eurocorp analysts, thus, increased the total sales projections by 29 percent to 1.1 billion euros and by 47 percent to 1.5 billion euros in 2007 and 2008 respectively. Eurocorp then upgraded its FY07 and FY08 EBITDA estimates by 10 percent and 22 percent respectively, while the EPS forecasts were lifted by 10 percent and 33 percent.

Ongoing French Case -- Belgium lawyers Thibault Verbiest and Evelyn Heffermehl from the law firm Ulys lodged a complaint over a year ago with the European Commission's Directorate General for Competition on behalf of the France Association of Modern Casinos, challenging the monopoly of the La Française des Jeux (FDJ) on grounds of abuse of dominant position. The latest is that the Commission is still examining the case (the lawyers have submitted additional elements last month) and it should give an answer on whether it will investigate further in a couple of months. It is expected that France Prime Minister Dominique de Villepin will also be heard.

In 23 Languages -- Expekt.com, one of Scandinavia's largest online gaming companies, has launched an online bingo game using Parlay technology. Expekt Bingo complements the gambling portal's current online offering of sports betting, poker and casino games. Expekt.com is an international online gaming company with business and betting licenses in Malta, the United Kingdom and Austria. Founded in 1999, the company has a goal to become one of the leading online gaming companies serving the global marketplace. Expekt.com today is one of the largest online gaming companies in Scandinavia. The service is available in 23 languages and Expekt.com has customers from over 130 countries.

Betting: No; Advertising: Yes -- In the federal German state of Bavaria, privately owned TV stations may, in spite of the prohibition of sports betting, still advertise their betting products. The verdict follows the Bavarian administrative court's ruling on Thursday that the Bavarian science Ministry may not instruct the Bavarian national medium center (BLM) to forbid broadcasting of the betting commercials. The judges have the opinion that advertisements are a part of the total programming. For program matters, the legal supervision is impossible. The court thereby confirmed a judgment of the Administrative Court Munich, against which the science Ministry had appealed.

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.