The online casino, poker and sportsbetting operator announced its results for the half year ended 30 June 2006, which saw total gross win increase by 48% on H1 2005 to £ 6.2 million with 74% of revenues coming from the UK and a profit before tax from casino and poker operations of £1.1m, in line with 2005.
The 32Red Casino showed a 27% increase up to £5.0m in gross win over the first half of 2005 despite a dip in volumes throughout the period of the World Cup. The number of active players in the period grew by 63% to over 9,500, while the average value of each player showed a drop to £523. The cost of acquiring new players fell from £176 in the second half of 2005 to £160 in this period.
The 32Red Poker Room continued to grow substantially from its low base in 2005. Revenues more than doubled to £0.6 million, while active players almost tripled to around 10,000. Nevertheless, the performance was softer than anticipated with a CPA of £31 and a quarterly revenue per active player of £48. Market factors such s the launch of the Swedish Government\’s online poker room and aggressive rakeback offers from competitors have impacted revenues negatively from mid March onwards. The 2006 World Cup resulted in a material decline in activity levels in the month of June.
On June 2006, 32Red acquired UK sportsbetting firm Bet Direct for a total consideration of £12.5m. Bet Direct revenues derived from three weeks of ownership were £0.6m, while the new customers were 2,904 and the total active customers were 25,047. World Cup performance during the period was successful and yielded a 9.8% gross win margin.
“Despite the negative influence of the World Cup in June, the 32Red online gaming business has shown revenue growth in the period and our Key Performance Indicators demonstrate encouraging trends for the future. However trading in the second half to date has not recovered as quickly as anticipated from the gaming industry-wide World Cup slowdown. We believe that the acquisition of Bet Direct in June will significantly enhance the scale and diversity of the business although a tough Goodwood and the one-off costs and expenses incurred have impacted our profitability,” commented CEO Ed Ware.
“We are confident that 2007 and beyond present significant opportunities for the new enlarged group and that our strategy of marketing to our main market, the United Kingdom, with the full complement of betting and gaming products will be a foundation for continuing progress and further success.”
32Red\’s focus remains on the United Kingdom and the sponsorship of Aston Villa FC is a significant step forward for the 32Red brand. The completion of the Bet Direct acquisition closed the initial phase of 33Red\’s move into sportsbetting. Whilst much remains to be done to develop and optimize the Bet Direct business, 32Red is pleased with the acquisition and encouraged by the opportunities presented by it. In order to meet the needs of the business, Martin Saunders will join the company in October as Trading Director with direct responsibilities over sportsbetting trading activities. Further to this, all Bet Direct activities, including the internet sportsbook and the gaming sites, will be relocated to Gibraltar in early September.
Trading since June 30 has been slower than anticipated, with casino gaming operations recovering from World Cup. In common with other bookmakers, Bet Direct suffered a difficult Glorious Goodwood racing meeting. After taking these factors into account and having reviewed the current situation, the Board of 32Red has concluded that market expectations for the full year may not be met. However, the firm remains confident that 2007 and beyond present significant opportunities for the new enlarged group.
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