World Gaming's Craven Addresses Shareholders

13 August 2002

For World Gaming shareholders and those who have followed the interactive gaming industry closely, hearing the thoughts and goals of a new World Gaming CEO isn't anything new.

"I don't think that an acquisition approach is immediately helpful for us at the moment. [World Gaming] isn't operating at its full capacity, nor is it in the kind of stable shape that would represent value for shareholders."

The company held a conference call Tuesday with David Craven, its newest CEO, the third in the last month and the fifth in the last two years. Craven has hope for the company with a troubled past.

Despite initial talks of merging with an undisclosed competitor last month, Craven said there are no plans to merge or acquire other companies until World Gaming can operate to its fullest potential, something he said that will take time to achieve.

In just three weeks on the job Craven has cut company costs by trimming down its sales force, closing Toronto offices, moving to cheaper offices in London and Antigua and withdrawing a lease on a corporate flat.

"I think share holders will be happy to see a decrease of more than $250,000 in our annual expenditures," he said.

In addition to cutting costs, Craven said, the company secured a short-term loan of $1.5 million to address the immediate needs as its gears up for a pivotal fall sports betting season. As CEO, Craven said he intends to increase World Gaming's presence in the investment banking community to increase funding for a long-term basis.

Instead of focusing on securing new licensees, Craven said, World Gaming will concentrate on reaping the benefits from what's expected to be a record fall for Internet sports books, thanks to the highly anticipated NFL and college football seasons in the United States.

To that end Craven said World Gaming signed an agreement on Friday with alternative payment solution provider NETeller, in the wake of PayPal announcing it was pulling out of the interactive gaming industry, and another deal of which the particulars will be announced later this month.

Those deals, he said, are the result of tighter credit card restrictions throughout the United States and other parts of the world. Craven didn't specify what the percentage was of credit card denials for those trying to gamble with World Gaming licensees.

As for the merger talks, last week officials with both World Gaming and IQ-Ludorum, the company that widely speculated other party, were tight lipped about any talks. World Gaming sent out a press release to shareholders late last month informing them that talks had taken place, but said a deal wasn't imminent.

"We are already headed in the right direction; it won't be easy, but I know that we can [succeed]."

Craven did shed some new light on the talks, though, saying that World Gaming explored the option, but determined there were other courses of action better suited for World Gaming at this time.

"We did have some introductory discussions about a merger with an undisclosed party, and we have not taken that discussion any further forward," he said. "I don't think that an acquisition approach is immediately helpful for us at the moment. The company isn't operating at its full capacity, nor is it in the kind of stable shape that would represent value for shareholders to make meaningful fiscal sense from merger or acquisition."

Craven added, however, that this doesn't mean down the road a merger or buyout of another company won't be in the cards.

"The key focus of the company has to be in stabilizing it and the reduction of cost," he said. "We need to work on the improvement of the serviceability of the product and help impact the turnover of Sportingbet and our other licensees. Then it wouldn't be beyond the realms of logic and possibility for us to start looking at acquisition and consolidation within this sector with partners that give us a global footprint."

Even if the a global partner is found down the road, Craven said, a merger or acquisition won't happen unless it makes fiscal sense for shareholders and the company.

"We will only do so on terms that we think will offer significant shareholder value," he said. "Given the opportunities that are presenting themselves this year and in the forthcoming years, we think we shouldn't do anything other than stabilize the company and make it profitable."

Having been on the job for only three weeks, Craven said he was still learning all the intricacies of the company and was working with developmental teams to continue the planned rollout of various products that were expected to be released throughout this year.

He said testing is being done on new sports betting software in addition to adding pari-mutuel services, multiplayer poker and bingo to the World Gaming offerings. Teams have been working around the clock in Antigua, where World Gaming's servers are located, on expanding the company's infrastructure before the start of the American football season.

"They have been going flat out with a deadline of September 1," he said. "We have installed a new server that increases our access by nearly 80 percent." While Craven may have a new approach for World Gaming, he did preach messages that have long been heard by shareholders and analysts.

He said the company's relationship with, its biggest licensee, continues to be vital to the long-term future of the supplier. He said officials with the U.K.-based betting site have communicated how they would like to see future versions of World Gaming software look and have relayed the current needs of operators.

With the open line of communication between Sportingbet and World Gaming, Craven is confident he can lead his company to the forefront of supplying the demands that are facing operators throughout the entire industry.

The underlying theme for much of the conference call, though, was that shareholders should be patient with the company as it reorganizes itself and tries to position itself as a new leader in the industry.

"I am confident that we can get operating to our fullest potential and take advantage of the opportunities that exist in this industry," he said. "The only thing that I would ask, or add to that, is that it will take time and I hope everyone will consider that. We are already headed in the right direction; it won't be easy, but I know that we can do it."

Emily Swoboda is the senior staff writer at IGamingNews. She lives in St. Louis, Mo.