The online sports book part of The Rank Group reported an operating loss of £1.7m, down from an operating profit of £2.7m in 2004, despite revenues were up 2.7% to £22.5m.
Blue Square experienced a difficult first half and while performance improved in the second half, revenue growth has not been sufficient to offset the combination of weak sportsbook margin, marketing and product development cost increases and initial losses from the Blue Square betting shop.
The firm finished the year with more than 232,000 active players, up 18.9%, and with an encouraging growth in its internet poker and casino products. Its strategy of migrating customers from online sports betting to online gaming has proved successful.
“Though we increased gross win by 2.7 per cent, to £26.3m, the overall margin fell by a full percentage point, to 4.8 per cent, which cost us £5m, largely because of weaker sports book and horseracing margins,” commented Mike Smith, Chief Executive of The Rank Group.
Blue Square said that for the first time online gaming exceeded sports betting in terms of total stakes. In 2006, the firm will seek to accelerate the momentum it has created in online gaming with the launch of a range of new products. A busy sporting calendar, which includes the 2006 FIFA World Cup in Germany, is expected to provide a boost to sports betting.
Blue Square’s betting shop, next to the group\’s Grosvenor Casino in London, will continue to be the division’s only bricks and mortar outlet, Smith added.
Results for The Rank Group saw revenue up 2.9% to £810m and operating profits down to £127m from £136m.
“The operating performance of the Group has been mixed. Revenue growth in our Gaming division has not been sufficient to offset the combination of operating cost increases and Blue Square\’s lower win margins. However, Hard Rock grew revenues and profits as a result of increased contribution from its hotels and gaming interests and the continued improvement of company-owned cafes,” said Mike Smith.
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