Sportingbet sees massive writedown on closure of US business

Online gaming company Sportingbet said that its exit from the US market would cost 210 million pounds ($393 million) and slash around 80% of revenue and profit from the company, an Associated Press report said.

The report said Sportingbet bailed out of the once-lucrative US market last week, selling its sports-betting, casino business and poker operations to Antigua-based Jazette Enterprises the day that US President George W. Bush signed a law that criminalized funds transfers.

The cost estimate overshadowed a 74% rise in net profit for the year ended July 31 to 69.5 million pounds ($130 million), the report said.

Revenue jumped to 2.06 billion pounds ($3.85 billion) from 1.53 billion pounds ($2.87 billion) in the same period a year earlier. Turnover in Europe was up 62% and gross margin up 50% compared to the previous year, according to the company.

Altium Securities analyst Greg Feehely was quoted as saying that the fiscal 2006 results were 'impressive but largely irrelevant.' Because of US moves to ban online gambling, Feehely said there was likely to be merger and acquisition activities as companies in the sector 'look to recapture liquidity, particularly in poker.'

Without the US, the company's operations were divided equally between its European sports, casino and poker business, its Australian sports business and the non-US business of Paradise Poker, which took 50% of revenue from Europe and the rest from elsewhere in the world, the report said.