The Isle of Man-based sportsbook released its results for the six months ended on 27 November 2005, showing a decline in group turnover, down 39% to £28.5m and an operating loss of £0.6m, compared to a loss of £0.18m a year earlier.
Betinternet said the sportsbook operation remained steady as the company undertook a reduced amount of marketing in anticipation of the move to a new sportsbook platform, which is being developed in partnership with IGW, a specialist software developer based in Miami.
The company is planning to launch the new software prior to the 2006 World Cup football tournament in June. Sportsbook hosting will be moved to Curacao to allow for a strategic move into the US market.
Turnover, including that from casino games, was at £25.1m (2004: £14.8m). The blended margin decreased to 2.1% (2004: 3.1%) as a result of both an increase in the number of less favourable results during the first half of the European football season and a change in the balance from sports betting to casino play.
Betinternet\’s live casino product, Play Live Casino, continued to perform strongly and the revenue generated from this and the football game, Play Football, outstripped that from sports betting during the first half of the financial year.
Following a strategic repositioning during 2005, the company\’s pari-mutuel operation, European Wagering Services, has shown very promising signs of growth. Turnover for the 26 week period was £3.4m. Whilst this shows an anticipated reduction compared with the previous period, the business is now operating on a significantly enhanced margin, resulting in a gross profit of £541,000.
The directors are confident that this business will deliver sustainable growth and increased profit. In addition, the report on the audit of the business by the US Thoroughbred Protective Bureau, due for presentation in March 2006, is expected to reflect EWS\’ business in a positive light.
Betinternet is also planning to launch a Random Number Generator casino alongside a number of fixed-odds games. The addition of these products will reduce the company\’s reliance on favourable sports results and better balance the risk exposure. The investment in Global CoreSports will see the launch of the first product, coreFootball in mid 2006. The reaction from the initial user trials has been extremely positive.
Commenting on the results, Denham Eke, Chairman of Betinternet, said: “These results show an anticipated fall at EBITDA level as a result of the previously announced changes within our pari-mutuel operation and a reduction in marketing activity in anticipation of the arrival of the new software platform.”
“The Board considers that the new platform, together with a strategic marketing push into the United States and the introduction of new gaming products, will enable the sportsbook operation to take advantage of the continued growth in the online gaming sector. In addition, we expect that European Wagering Services will continue its growth with a steady, sustainable increase in its customer base.”
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