Market Briefs - Jan. 30 - Feb. 3

Citadel Parent Company Prepares for IPO in Canada

Canada-based gaming products and services company e-Success Inc. announced Jan. 27 that it had filed a preliminary prospectus with Canada's securities regulatory authorities in connection with an initial public offering and a secondary offering of its common shares. The company intends to change its name to ESI Entertainment Systems Inc. upon completion of the offering. In addition to online payment transaction processor Citadel Commerce Corp., ESI also has as subsidiaries gaming and security risk management firm ESI Integrity Inc. and social gaming solutions provider PlayLine, Inc. The syndicate for the offering is led by Desjardins Securities Inc and includes CIBC World Markets Inc. (TSX.CM) Canaccord Capital Corp. (TSX.CCI) and GMP Securities LP.

Great Second Half for Pago

Germany-based payment processor Pago eTransaction Services GmbH says it experienced a "particularly good" second half of 2005, with sales growth having increased more than 40 percent compared to the same period in 2004. Pago's number of acceptance clients rose by 62 percent to over 6,900 in 2005 and its number of terminals increased by 48 percent to 7,600. Transaction volume consequently rose 16 percent compared to 2004. The company's clients are predominantly in the e-retailing, online gambling, e-travel, e-health and telecommunications industries.

Sale of Hilton Hotels Approved, Ladbrokes Stands Alone

Shareholders at the Hilton Group Plc's (HG.L) recent exceptional meeting voted with almost 100 percent backing to trade the company's hotels unit to America-based Hilton Hotels Corp and to rename the company Ladbrokes, despite media reports that Hilton Group's chairman Sir Ian Robinson had to defend the sale against much sharp criticism at the meeting. Said Sir Ian, "We had an extremely attractive offer for the hotels business and we will return a significant amount of cash to shareholders. Shareholders will significantly benefit and we believe the future of Ladbrokes will be a very positive one."

Hilton Group again addressed rumors that it has received offers for the purchase of Ladbrokes by verifying and then dismissing them last week. "These approaches included a number of pre-conditions and failed to recognize the long-term strategic value of Ladbrokes," read a company statement. "The board reiterates its confidence in the business and prospects of Ladbrokes and is looking forward to Ladbrokes trading as an independent betting and gaming company."

German Company to Float Ahead of World Cup

German sports betting company Bet 3000 is thought to be preparing for an initial public offering on the Prime Standard section of the Frankfurt Stock Exchange to take advantage of World Cup opportunities. Commerzbank and Morgan Stanley will reportedly serve as lead the banks for the offer.

Poker Soars at 888, Casino Slips

888 Holdings Plc (888.L) announced in a statement ahead of its full-year results that its annual revenues rose 52 percent in 2005 to US$271 million. The biggest growth came from the company's poker operations, which experienced a 138 percent increase to $36 million in the fourth quarter, aided by the introduction of multiple language versions of the sites. Revenue from 888's casinos was flat in the fourth quarter, however, at $41 million. A 48 percent increase in casino player numbers was offset by an 8.5 percent drop in average revenues per player. 888's CEO John Anderson told The Times last week that was eager to acquire an online sports book that targets non-U.S. punters so that his company can offer a full range of products.

Ukbetting Plans £11.5 million Placement to Develop Content

British online gaming company Ukbetting Plc (UKB.L) plans to raise £11.5 million through a share placing to develop content on its sports content and gaming sites. The unique aspect of Ukbetting is that in addition to sports wagering sites it also owns a network of 16 sports content sites, including Football365, SportingLife and Teamtalk which attract about 8.5 million users each month. The content sites have been successful in both driving customers to the gambling sites and in generating advertising revenue, which now constitutes a majority of Ukbetting's profits. The fundraising proceeds will be used to further develop this aspect of the business, and updates to the content sites will probably include drop-down boxes, video-streaming and a capacity for more advertising. There will also be new versions of the sites in multiple languages.

A strategic review of the company's sports book operations--which taken in isolation have not fared so well lately-- is also underway. Chairman Peter Dubens stated, "We are not going to run the sports book in the way we have done historically. We are doing a strategic review to look at just how the sports book is run. He added, "What we need to do is stop losing money on sports betting and allow the profits we are making in all the other areas to come through.

Reporting

Canadian I-gaming software developer Chartwell Technologies Inc. (CWH.TO) achieved annual revenue growth of 46 percent in its fiscal year 2005, which ended Oct. 31. Revenue improved to CA$17.8 million, compared to CA$12.2 million in 2004, and software license fees reached CA$16.4 million, compared to CA$11.3 million, in what was the company's third consecutive year of profitability. Chartwell CEO Dan Gleason says the company experienced significant growth both financially and operationally in 2005. "Financially, we achieved record revenue, maintained strong quarterly profitability, increased our EBITDA and operating margins, strengthened our balance sheet and increased our working capital," he stated. "Operationally, we extended the capabilities of our product development, deployment and support teams through a staged investment program which included the acquisition of Micropower Corporation. The investments are essential to enabling the Company to drive continued growth in the expanding market for our products."