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Analyst Commentary: Sportingbet.com is traded on the AIM under SBT. Like many other companies, Sportingbet has seen its share price drop in recent weeks. It's also included on the RivTrend Global I-Gaming Stock Index TM.
Analyst John Dutton, the president and director of research for Investrend Research, commented on Sportingbet's recent stock price valuation:
Since early Feb., the EuropeanAustralian portion of our RivTrend Index has declined from 123 to today's close at 100.9 (down 21.9 percent). A substantial portion of that index is Hilton, a large company that does not usually show as much volatility. Taking out Hilton (Hilton Group plc), the Index was down 28 percent from Feb. 1 through today. SBT is a small company in that index in terms of financial strength, and of course profitability.
By contrast, the Russell 2000, a widely used index of the small cap markets, declined from 508.8 to 442.2 during that period (only a 13 percent decline). Also, it could mean the underwriters overpriced the issue and forced it out at that price.
SBT on Feb. 1 was 123.5, rising to 142.5 on Feb 10, and then trailing down to 109.5. Companies who do not earn money are under pressure, and SBT is in a great field, has grown well, but is not profitable.
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Although Sportingbet.com has yet to become the world's largest Internet bookmaker, the company has a good chance of achieving that status within the next few years. Even if it doesn't (it's likely, after all, that one or two competitors will fiercely guard their top spots from Sportingbet), the once tiny betting firm will at least have the satisfaction of gaining international
recognition among gamblers in numerous nations and joining the big boys by becoming a publicly reporting company.
Founder Mark Blandford started off with a dream and one retail betting shop back in 1984 before growing and selling off parts of his business, acquiring more and finally setting up virtual shop with his NetBet sports betting company. (For more information about Blandford's and
Sportingbet's early days, read An IGN Q & A: Mark Blandford (Part 1).) That company eventually became the Internet sportsbook behemoth
Sportingbet.com, a U.K. company licensed in Alderney. Along the way, the group has also launched its own online casino from SportingbetUSA, targeting the American audience. Another Internet casino--to be offered from the main Sportingbet.com site--is in the works.
During the first few months of 2001, the company has gone through a highly successful IPO on the Alternative Investment Market (AIM) (see analyst's comments below), acquired customers from the now-defunct online bookmaker Firststake plc, and most recently bought Australia's largest private bookmaker, Number One Betting Shop Limited.
While Sportingbet makes success look simple, there are several driving factors behind the company's growth. "We are now a company that genuinely can claim to be global in that we have a substantial size and presence in all of the main markets of the world," explained Finance Director Nigel Payne.
"As we start penetrating these markets, it's proving that the model and the infrastructure and the way we've set ourselves up was the right way," he added.
The right way, Payne said, means offering the product to the customers in their own language, in their local currency and in the way they bet locally. "People bet very differently in different parts of the world," he said, "and so tailoring our software so that it offers them bets according to where they are--in terms of the style of bets, what languages they want to
bet in and what currency--is proving to be a very good model."
The efforts have paid off, as they're expanding their customer base to include 90,000 customers from 104 nations. Plus, the acquisition of Number One brings another 25,000 customers (of which 20 percent are active accounts) to the Sportingbet family.
January's successful stock flotation, probably one of the few successful Internet company IPOs in recent history, has also been a boon, which Payne said has "given us better international standing. As a result, we're having a large number of opportunities come our way."
He's quick to point out that these opportunities don't just consist of acquiring other companies. "I wouldn't want to mislead you into thinking that we're just going to buy the world," he added with a laugh.
Instead, a number of those opportunities are marketing agreements whereby Sportingbet pays a "bounty fee" for every customer from the other party that becomes a Sportingbet customer. Such moves are especially successful when Sportingbet forms an alliance somewhere where the company has already established a physical presence. Instead of acquiring more office and staff, "it's better to essentially buy the database," Payne said.
Sportingbet may also be unique in how it's working to establish a global presence. "What we've done is we've offered the languages first to the betting markets that we see as the biggest," Payne said.
That means that Sportingbet offers its services in six languages so far: English, German, Spanish, Chinese, Japanese and Turkish. And while the company wants to attract players in other nations, it would prefer to concentrate on the "bigger fish first."
Sportingbet's fastest growing customer base, for example, is in the Asian market, which represents 20 percent of the company's turnover. The largest customer base is America, Payne added, accounting for 55 to 60 percent of their market. (These figures don't take in account those customers from the Number One acquisition.)
"Our strength," he added, "is to expand and get bigger and then build the global brand."