Company Spotlight: One business makes the internet a really safe bet - Spend & Save - Money - The Independent

Company Spotlight: One business makes the internet a really safe bet

Purveyors of porn apart, few businesses have made real money from the internet.

Purveyors of porn apart, few businesses have made real money from the internet. Yes, it has transformed the economics of dating agencies, newsletters and specialist information services, and parts of the banking and securities industries have benefited, too, though often at the expense of cannibalising their bricks-and- mortar operations. But for most firms, being online has done little for the bottom line.

However, one big beneficiary stands out: betting and gaming. The internet has paved the way for new forms of interactive games, made pricing more transparent, and brought in many thousands of new customers. Betting exchanges such as Betfair have even allowed the customers to act like bookies, taking bets rather than just placing them. Online casinos have proliferated. In its last statement, bookmaker William Hill said estimates put the number of online gaming sites at between 1,400 and 3,000.

Now you may not actually approve of all this but it is interesting to note that Britain has a world champion in this business, in the form of Aim-listed Sportingbet. It claims to be the world's largest online betting group, taking more than £1bn of bets each year or eight bets per second. It has more than a million registered customers worldwide, 70 per cent of them in the United States.

There lies one of its problems. A mix of state and federal statutes (topped by the Wire Act) makes internet gambling illegal in much of the US. In practice, making that ban stick if the gambling operator is based offshore is difficult, though a couple of years ago a number of US banks stopped processing credit card transactions related to online bets. Sportingbet got around that with new payment channels, and two US states - California and Washington - have since passed bills to allow horse racing bets to be taken over the internet. More are expected to follow suit.

But Sportingbet's share price has recently been buoyed by hopes that the impasse will be broken. The impetus for change is coming not from the US Senate but from the General Agreement on Trade in Services (GATS) to which America is a signatory. As such, it is committed to opening its borders to non-domestic suppliers of gambling. A dispute brought initially by Antigua, which licenses many of the offshore betting firms, has gone against the US which has yet to respond. This could be the beginning of the end for American prohibition.

Sportingbet will hope so. Americans are flocking to cyberspace to place bets. The company has just launched an internet poker room that is expected to be especially successful in the States. Word is that the launch has gone very well.

Sportingbet has had its share of ups and downs. Just over a year ago, punters would have been forgiven for betting it was headed for the knacker's yard. In 2001, it had bought an online bookmaker with a big US presence called Sportsbook. It had paid £33m up-front but agreed to pay an extra £92m from September 2003 onwards depending on performance.

In the event, Sportsbook did so well in the following two years that the follow-up payments threatened to bring Sportingbet down. The company even considered selling out at less than a third of today's share price. But it finally agreed new terms with the Sportsbook vendors, issued them a pile of shares and loan notes, and secured new banking facilities from Barclays. Since then, Sportingbet has not looked back.

In the year to end-March, the company lifted its operating profits (before goodwill and exceptional costs) by a third to £19.6m. Importantly, it generated a lot of cash - and continues to do so. Over the past 12 months, Sportingbet has repaid £16.5m of debt. There is still more than £30m of borrowings on the balance sheet, but the business carries big amounts of cash, too - £23.5m at the last count. Its bankers can now rest easy.

The business is growing at a tremendous pace. In the four months to the end of July, normally the quietest period of the year, Sportingbet put on 76,000 new customers. The number of sports bets placed during the period rose by more than a half on the same period a year ago. The European business moved into profit for the first time last year and Australia is proving a boom territory with nearly half of all bets now placed over the internet.

With profits likely to top the £25m mark this year, a stock market value of just over £200m still has half an eye on last year's problems. If the US market truly opens up to Sportingbet one of these days the odds on a bid for the business from one of the big US betting and gaming operators will shorten dramatically. The price will be a lot more than £200m.

Pshearlock@yahoo.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
News
peopleThe report and photo dedicated to the actress’s decolletage has, unsurprisingly, provoked anger
Property
Home body: Badger stays safe indoors
property
PROMOTED VIDEO
News
The programme sees four specialists creating what they believe are three perfect couples, based on scientific matchmaking. The couples will not meet until they walk down the aisle together
tvUK wedding show jilted
Arts and Entertainment
US pop diva Jennifer Lopez sang “Happy Birthday” to Gurbanguly Berdimuhamedow, president of Turkmenistan
musicCorporate gigs become key source of musicians' income
Arts and Entertainment
You've been framed: Henri Matisse's colourful cut-outs at Tate Modern
artWhat makes a smash-hit art show
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig believed to be donning skis as 007 for first time
Sport
Mikel Arteta pictured during Borussia Dortmund vs Arsenal
champions league
Voices
Yes supporters gather outside the Usher Hall, which is hosting a Night for Scotland in Edinburgh
voicesBen Judah: Is there a third option for England and Scotland that keeps everyone happy?
Arts and Entertainment
Pulp-fiction lover: Jarvis Cocker
booksJarvis Cocker on Richard Brautigan
Arts and Entertainment
Robin Thicke and Pharell Williams in the video of the song, which has been accused of justifying rape
music...and he had 'almost no part' in writing it
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Sales Executive

    £20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

    Payroll & Accounts Assistant

    £20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...

    SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

    £280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Senior BA - Insurance **URGENT**

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week