Market Briefs - Sept. 12-16, 2005

Joining the Float Party

The latest I-gaming company to announce its intent to float on the Alternative Investment Market of the London Stock Exchange is Fairground Gaming Holdings. The group plans to raise about £8 million through the float and use the money to acquire and consolidate I-gaming properties. The company is headed by CEO Evan Hoff, who worked for Price Waterhouse as a chartered accountant before founding forwardSLASH, an outsourcing and marketing provider to the online gaming industry. Hoff is an executive of Quest Limited, a London-based due diligence and intelligence firm that services major U.K. corporate and professional firms. "The online gaming sector is beginning to benefit companies with scale and brand recognition," Hoff said. "We see significant opportunities for a consolidator such as Fairground Gaming to target and attract relatively small operators and to create a sizeable and synergistic business model to capitalize upon the market potential." . . . eGaming Review reports that Cyprus-based I-gaming software firm Playtech met with advisors in London over a potential initial public offering on the London Stock Exchange. A source indicated that a listing could occur as early as November and that a trade sale was an alternate possibility. A spokesperson from Playtech stated, however, that a listing would occur before the end of 2005. . . . Betex, operator of the elite128.com soccer betting site, has appointed Numis Securities as an advisor to a float on the London Stock Exchange's Alternative Investment Market. The company is already listed on Ofex--a less regulated market for smaller companies--but intends to raise between £10 million and £15 million through an AIM float to fund gaming contracts in China. Betex in July became the first non-Chinese company to win a lottery contract in the country when it received a contract to manage the state lottery of the province of Guizhou. The company is also having discussions with other Chinese provinces to potentially run more lotteries in the country.

Not Joining the Float Party

Independent Irish bookmaker Boylesports plans to offer franchises for some of its betting shop operations. The company will provide all backup services in return for a percentage of profits. CEO John Boyle told the Irish Independent that he wants the value built up in his shops to remain in the industry rather than be exported to outside investors through a stock market flotation (like the one planned by rival Irish bookmaker Paddy Power). Funds gained through franchises will enable Boylesports to focus on developing its online gambling business.

GTECH's Mystery Suitor

GTECH Holdings Corporation (GTK) says it has been approached by an unidentified party interested in acquiring the company. GTECH's board of directors has enlisted the assistance of Citigroup Global Markets to serve as financial advisor in examining the company's strategic options.

Unibet Issues Shares in Acquisition Deal

Swedish-owned online gaming operator Unibet Group Plc (UNIB.ST), has issued 2.4 million new ordinary shares at 0.5p each as part of consideration for the acquisition of the entire share capital of Global Leisure Partners Ltd. Unibet announced in August that it would acquire Global Leisure Partners Ltd., the parent company of I-gaming operator MrBookmaker.com, for £75.9 million, payable through £22.25 million up front, £22.25 million in loan notes and the 2.4 million aforementioned new issued shares.

Gaming Corp Trading Update

Gaming Corporation Plc (GMC.L), operator of gaming portals Gambling.com and Casino.co.uk, has issued a trading statement to inform the market on a number of key developments in trading for the year ending September 2005. The company has completed the integration of Gambling.com and says the portal is exceeding expectations. The gaming business launched in partnership with Orange UK is also out-performing initial revenue forecasts with more than 2,500 registered customers already acquired during the soft launch phase. Gaming Corp says it is in negotiations with other mobile companies to launch similar services on their networks, and the shift to its new software supplier for Internet and mobile games has led to a significant reduction in costs. While the increasing cost of customer acquisition is a concern in the online gaming industry, the growing subscriber acquisition and marketing costs have been beneficial to Gaming Corp because operators are now paying up to 50 percent more to acquire customers from its gaming portals.

Reports Released

Chartwell Technology Inc.'s (CWH.TO) financial results for the three months ended July 31, 2005 include an improvement from $3.6 million to $4.6 million in revenue when compared to the same period last year. Software license fees improved from $3.4 million to $4 million. Net income fell from $1.2 million or $0.07 per diluted share to $728,000 or 0.04 per diluted share.