Eye on Europe - May 5, 2006

5 May 2006

Sazka Recouping -- The Czech Republic Chamber of Deputies has decided that lottery companies can not refund the VAT. Nevertheless, Sazka, the largest lottery company in the Czech market and a member of the European Lotteries, still plans to ask for VAT refunding. If its request is turned down, it will go to court. Sazka, heavily burdened after building a domed ice-hockey palace, could not until recently financially support the sports associations awaiting the good causes. Sazka is on the rebound though, as positive Q1 2006 results--US$26 million in the first quarter of 2006 (a growth of 35.4 percent over the same period in '05)--have enabled the group to transfer $12 million to sports associations that are shareholders. Sazka also managed to reduce its debt from a bond issue by more than 10 percent, or $23.8 million, in the last 12 months.

Polish Bedlam -- The situation concerning the National Lottery of Poland (Totalizator Sportowy Sp. z o.o.) remains unclear, as political decisions seem to be more important than professional management. According to Puls Biznesu, an independent financial business publication in Poland, the newly nominated member of the supervisory board, Waldemar Milewicz, has temporarily become part of the lottery's management board. In the meantime, the supervisory board has suspended management board member Franciszek Zalewski. According to Puls Biznesu, Milewicz used to be closely tied to the League of Polish Families (LPR), while today he is reported to have strong contacts with the governing Law and Justice (PiS) party. The confusion going on in the company has lead to a drop of 20 percent in revenues for the first quarter of 2006. Totalizator Sportowy has left a trace of scandals behind in recent years.

EL Watchers -- It is said that Intralot is considering listing its subsidiaries in Turkey on the Istanbul Stock Exchange and the Bulgarian Stock Exchange. Reports indicate that that Intralot, another member of the European Lotteries, and its partner, Turkcell, plan to list their co-owned Inteltek unite on the Turkish Stock Exchange. Inteltek is 55 percent controlled by Turkcell and 45 percent by Intralot and has the exclusive license to run fixed-odds betting for eight years in Turkey on behalf of Sportoto, the Turkish national betting company. Intralot, an operator as well as a leading global supplier, is hoping to win the Turkish National Lottery privatization in cooperation with Ladbrokes and Malaysian company Tanjong Public Limited, which has business interests in property investment, power generation, liquefied petroleum gas, entertainment, travel and gaming (via Pan Malaysian Pools Sdn Bhd). It's an interesting combination for European Lotteries watchers.

Push the Sales -- Cherry's wholly owned Internet gaming product company, Sweden-based Net Entertainment, has signed agreements with Sunderlands Bookmakers, Triobet, and i4Poker to deliver Internet casino games. All of the customers will use CasinoModule, Net Entertainment's Internet casino platform. CasinoModule consists of a large number of games and a powerful management platform. It provides casino games, number games, lotteries and skill-based games. The CasinoModule is integrated into the client's existing Web site and IT-system. It is licensed on a royalty basis; the royalty is dependant on the performance of the product. The new licensees will start offering Net Entertainment's games during May and June. Sunderlands Bookmakers, an English betting company with 11,000 customers, will soon open its Internet site. The group has a traditional betting operation that focuses on high rollers, who will now be offered Internet gaming as well. Triobet, a recently established Internet gaming company with 3,000 customers, will focus on Eastern Europe. I4Poker, a poker site with 40,000 customers, will primarily address the Polish market. Net Entertainment also recently set up a CasinoModule system for Azul Electrico S.A., a casino operator that with over 100,000 customers and focusing on the U.S. market with its gaming sites, worldwidevegas.com and winwardcasino.com. Finally, Net Entertainment will launch a CasinoModule product in May for online gaming company Pathfinder, operating the site tsc2000europe.com with 100,000 customers. Pathfinder will additionally launch the gaming site pfgames.com, which will also offer games from Net Entertainment.

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.