Market Briefs (Sept. 16-20)

Kerzner Owns $15 Million In London Clubs International

Kerzner International Ltd. (KZL) announced on Monday, Sept. 16 that it owns $15 million worth of senior notes in London Clubs International (LCI).

The company, which operates the online gaming site Casino Atlantis, made the statement in response to media reports that it had acquired £50 million of LCI's debt. Kerzner, formerly known as Sun International, said that it purchased its shares in LCI in July 2002 and paid about $13 million for them at that time.

Kerzner commented that it is not its general practice to respond to media reports about potential transactions until they are completed. In addition, the company stated its belief that changes in U.K. gaming law will amount to a change in the country's gaming market.

"The company believes that the expected deregulation of gaming in the United Kingdom will have a positive impact on the U.K. gaming market and is monitoring the progress of deregulation," Kerzner stated. "The company in the past has had, and in the future may have, some discussion with LCI, but in accordance with normal policy, will not be making further announcements regarding potential transactions."

Gtech Revenue Increases in Second Quarter

Gtech Holdings Corp. (GTK) said last week that its revenue for the second quarter of 2002 totals $220,958,000, a decrease from last year's second-quarter revenue of $236,584,000.

Net income was higher at $38,207,000, compared with net income in the corresponding period last year of $16,636,000.

Basic share earnings totaled 67 cents per share, which reflects a 2-for-1 stock split in May of this year. Last year, second-quarter basic share earnings were 28 cents per share.

The lottery services company is forecasting fiscal 2003 earnings of between $2.10 and $2.20 per diluted share, an increase from its projection in June of $1.70 to $1.80 per share.

William Hill Reports 78 Percent Increase in I-Betting

English bookmaker William Hill (WMH) is reporting a 32 percent increase in profit for the first six months of its fiscal year. The results are the first that the company has released as a publicly traded company. The group is warning that it may be showing unfavorable results later in the year.

Online betting sales increased 78 percent to £197.6 million.

William Hill executives report that at the end of the second quarter, margins on horseracing were lower than what had been expected. Chief Executive David Harding said the lowered margins were a short-term statistical occurrence.

"Over the short term you are bound to have periods where results go against you," he said. "We don't see this as a fundamental concern."

William Hill is reporting pretax losses of £12.2 million, which compares to pretax profit of £18.9 million. Total sales for the year increased 47 percent to £1.59 billion from £1.08 million the previous year.

The company says that its first-half increase is representative of the abolition of the U.K. betting duty as well as a rise in sales due to horseracing and the World Cup.

Chartwell Revenue, Expenses Increase in Third Quarter

Chartwell Technology Inc. (CWH) is reporting a 20 percent increase in revenue to $1,11,939 for the third quarter ending July 31. That is an increase from the same period last year, in which the company received $928,663 in revenue.

Expenses for the third quarter climbed, however, to $1,131,736 from $926,911 last year. For the nine-month period, expenses increased to $3,749,959 from $2,833,266. According to Chartwell, the increase in expenses reflects the company's continued development of games, including offerings for casino, bingo and poker.

Darold H. Parken, president and CEO, said Chartwell is looking toward Europe and new games as growth areas.

"We are seeing continued growth in Europe with the opportunity to break into new verticals," he said. "Poker, bingo and wireless gaming are all new opportunities for revenue growth, both within our existing client base and with new licensees."

Tab Ltd. Relaxes Shareholder Restriction

Shareholder restrictions for Tab Ltd. (TAB) were lifted by the New South Wales government last week from 5 percent to 10 percent.

Warren Wilson, Tab's managing director, said the time had come to put an end to the five percent rule.

David Cooper, a SHAW analyst, said of the change: "Changes to the legislation may see institutional investors increase their shareholdings above the 5 percent restriction sometime in the near future. Although there is no definite indication of who would be interested in the gaming company at this stage."

Reports Released

In its interim report for the six months ended June 30, Sportech plc (SPO) states that its turnover increased 6 percent to £96.7 million, up from £91.3 million in the same period last year. The company's online casino, Littlewoods, was launched this month.