World Gaming Enters Administration
U.K.-based software and gaming firm World Gaming Plc last week became the first I-gaming company to go into administration after the signing of anti-Internet gambling legislation in the United States. World Gaming, which suspended its shares prior to the enactment of the bill, said it could no longer trade in the United States, where it derived more than 90 percent of its revenues. Andrew Andronikou of U.K. accountancy firm UHY Hacker Young, which is overseeing the administration, called World Gaming's collapse an isolated incident. "We're going to see consolidation in the industry over the next few weeks," Andronikou said, noting that Sportingbet and Leisure & Gaming both sold their U.S. operations for a token $1 on the day the bill was signed. "Competitors are shutting down their U.S. operations and concentrating on the European market." Before suspending its shares, World Gaming's share price slumped by 88 percent because of its reliance on its U.S. operation. Its shares were finally suspended on Oct. 13 at 4p. Its last trade was on Oct. 16, and it closed at 2p.
Bodog Buys Betcorp
Australian gaming company Betcorp Limited confirmed today that it intends to sell its U.S.-facing Internet sports betting business, WWTS, to Costa Rica-based gaming company Bodog Entertainment for US$11 million. Under the terms of the tentative deal, Bodog will pay $9 million in cash in four installments over 12 months and assume liabilities of $2 million. Betcorp said it decided to sell the business after its board received legal advice concluding that due to the new legal climate in the United States, it could no longer provide its services to the market, which represented more than 85 percent of the company's revenues. Bodog, however, has announced that it will not pull out of the United States. The deal is subject to approval by a meeting of shareholders scheduled in the next four weeks.
Party to Take $250 Million Hit
PartyGaming revealed last week that its decision to turn away U.S. players will cost the company $250 million and that revenues from its non-U.S. operations have fallen. The company announced its withdrawal from the U.S. market—representing three-quarters of its customer base--after the passage of the Unlawful Internet Gambling Enforcement Act in September. The company said today that since it stopped taking U.S. bets on Oct. 13, average daily revenue from its non-U.S. operations had fallen 2 percent. It also said that it is too early to comment on the future impact. The company is now focusing on building up its European business and plans to open multilingual pokers sites.
CEO Mitch Garber said the company had been in takeover talks with various online gambling companies and continued some of those discussions after the U.S. ban came into effect. He said the company expects to see takeover activity in the next few weeks.
"I believe strongly in consolidation, and I believe we are going to be a consolidator," Garber said.
Revenues Increase for 32Red
Online casino and sports book 32Red said today that trading has continued to recover from the slowdown seen during the World Cup. The group reported a 56 percent increase in total revenues for the third quarter to £4.2 million (compared with £2.7 million a year earlier). That number included a contribution from the BetDirect business, acquired in June. The group, which withdrew from the U.S. market on Oct. 13, said that earnings from the first half were not material to its performance.