Owners of PokerStars Seek to Unload Business
The owners of PokerStars, the world's second largest online poker site, have reportedly appointed investment bank NM Rothschild to pursue options to either float or sell the company for a figure thought to be more than US$2 million. PokerStars, which recently relocated its main offices to the Isle of Man from Costa Rica, was founded by Israeli Isai Scheinberg, whose family owns about 75 percent of the business. The remainder is owned by employees of the company. A float on the London Stock Exchange would likely occur no earlier than the second half of 2006, but the company is expected to generate so much interest among rivals that an earlier sale is probable.
Benefits Outweigh Risks for American Shareholders
The New York Times published an article on Dec. 25 contrasting the U.S. government's declaration that online gambling operations are illegal against the fact that the country's biggest investment houses are investing in such businesses in large amounts and at a growing rate. Titled "Wall St. Bets on Gambling on the Web," the article revealed that Morgan Stanley, Goldman Sachs, Fidelity and Merrill Lynch hold sizable shares in online gambling ventures. It noted that Fidelity Management holds 14.1 percent of the outstanding shares in Sportingbet Plc (SBT.L), a stake valued at about US$363 million, that Merrill Lynch Asset Management has $164 million in holdings of Sportingbet and that Goldman Sachs Group Inc. has $137 million in holdings in Sportingbet. It also noted that Morgan Stanley holds a stake in BetonSports Plc (BSS.L) that is worth around $25 million. The overall theme of the piece was that "the investment houses have taken the position that they indeed know there are legal risks involved in investing in offshore casinos, but that the risks are outweighed by the benefits of owning shares in growing, highly profitable businesses."
BetonSports Picks up Three More I-gaming Businesses
Online gaming company BetonSports Plc (BSS.L) has acquired three U.S.-focused online gaming firms--MVPSportsbook, Player Super Book and V-Wager--for an initial consideration of US$20.2 million, with an additional deferred consideration of up to $16.8 million becoming payable depending on the profitability of the businesses during the next four years. BetonSports CEO David Carruthers said the acquisitions represent "an exceptional opportunity to bring well respected brand names into our family and to integrate with our existing businesses seamlessly and using our existing infrastructure." He added, "At the same time, the acquisition extends our cross selling opportunities and further strengthens our management team with U.S.-facing sports betting expertise. This transaction demonstrates the company's commitment to consolidation within the Industry and shows our continued confidence in the growth opportunities of the U.S. market."
Rank Sells Film Unit and Undertakes Structural Review
The Rank Group Plc (RNK.L) has sold its film processing and creative services bureau, Deluxe Film, to DX III Holdings Corporation for £430 million (US$750 million). The company says that Deluxe Film and another branch that it is still trying to sell, Deluxe Media, have always been important parts of Rank, but that they are the "least best fit." With the deregulation of gambling taking place in the United Kingdom, the board of Rank decided in September 2004 that it was time to separate the two divisions from the rest of the company. The loss of the cash degenerative unit will dilute earnings and leave Rank's dividend uncovered, so the company is therefore undertaking a review of its capital structure and dividend policy, the outcome of which will accompany the group's 2005 preliminary results announcement on March 3, 2006. The company will at that time announce an adjusted dividend, which is expected to be cut by about 25 percent, but there will be no change to the expected level of the final dividend for the 2005 financial year. CEO Mike Smith is intends to return most of the proceeds from the sale of Deluxe Film to shareholders through a share buyback.
The sale could make Rank a more attractive potential purchase for other large gambling firms hoping to take advantage of the British deregulation. Rank's properties include Grosvenor Casinos, the Mecca bingo online unit, Blue Square and the Hard Rock Café chain. Bid speculation has caused the company's share price to rise by 20 percent in the last six months to close at 305p. Just two weeks ago it was revealed that Rank and William Hill Plc (WMH.L) had been negotiating a possible all-share merger, but the deal was rejected by William Hill's board of directors because the companies have a different rating on the London Stock Exchange.
Chimera to Become Fully Reporting Issuer on OTCBB
Online gaming software provider Chimera Technology Corp (CNOC.PK) has reconciled all internal accounting according to U.S. Generally Accepted Accounting Principles and intends to initiate the registration process with the Securities and Exchange Commission to become a fully reporting issuer. The company's 2005 financial statements will be completed and made available to the public in early 2006. The company will then file to become a fully reporting issuer on the Over the Counter Bulletin Board with quarterly and annual financial results as per SEC guidelines.
3D Environment Software Company Lists on Nordic OTC
Online gaming software developer DQE AB, also known as Designed Quality Entertainment, listed on the Nordic OTC exchange last week. The company owns the software behind 3D poker site Vegas007.com and is talks with other companies to sell the same software.
OPAP Rewards Bonus Shares to Investors
Greek lottery operator OPAP (OPAPF.PK) will reward a bonus issue of one new share for every 10 shares to non-institutional private investors who picked up shares through its public offering in July 2005. The company will offer a maximum of 100 new free shares per person.
Reporting
Interactive Systems Worldwide Inc (ISWI), operator of the SportXction play-by-play wagering system, has reported revenues of US$162,000 for its fiscal 2005 ended Sept. 30, an improvement over last year's $45,000. Net loss and net loss per share for 2005 were $7.3 million and $0.71 respectively, as compared to $6 million and $0.64 lat year. ISWI says it is disappointed that SportXction has not seen a larger increase in utilization and revenue in the United Kingdom. The company is particularly disappointed that its partners have not marketed the product to the extent necessary to achieve critical mass. The SportXction Internet product runs in a separate window in the browser, so a player using the SportXction system cannot also monitor or place bets on propositions managed by ISWI's clients. ISWI speculates that some clients believe that marketing the SportXction product would cut into revenue drawn from their own offerings. Its solution is to fully integrate SportXction into the clients' existing betting systems, maintaining their unique look and feel.
Interactive Systems Worldwide Inc - Annual Report