Sportingbet pays $33m to avoid charges in the US
Wednesday 22 September 2010
Sportingbet, the online gambling company which sponsors the Premiership's Wolverhampton Wanderers, has agreed to pay $33m (£21m) to avoid charges in the US, where it operated illegally for almost a decade.
American citizens are banned from online gaming, but Sportingbet – in common with a number of London-based groups – used online payment services outside the normal banking system in order to disguise the transfer of wagers and winnings, until Congress clamped down in 2006.
The company's shares surged yesterday on news of the non-prosecution agreement with the US Justice department, which came after years of negotiations and 18 months after rival PartyGaming paid $105m to settle the issue. The stock closed up 10 per cent at 77.25p, amid speculation it could now take part in the wave of consolidation sweeping the sector.
"This settlement enables Sportingbet to draw a line under events of the past," said the chief executive, Andrew McIvor, "and we can now look to the future with increased confidence."
The company will pay an initial $15m this month, with the balance due by 31 March 2012. The $33m total represents the amount of money the company made from wagers taken in the US between 1998 and 2006. It has also agreed to co-operate with the US authorities' ongoing investigation into illegal online gambling.
The 2006 clampdown by Congress came out of the blue, and caused online gambling stocks in London to crater. Sportingbet, which took a majority of its wagers from the US, shut down its US business immediately.
Michael Campbell, an analyst at Daniel Stewart, said the size of the settlement was at the lower end of expectations, and cleared away a major uncertainty over the business. "The agreement should make it easier for Sportingbet to tap capital markets, should funds be needed to do any deals, as the US overhang is now eliminated," he told clients. "Most importantly, the settlement now makes Sportingbet a highly probable M&A target."
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