Sportingbet Plc
(“Sportingbet” or the “Group”)
Disposal of US Operations
Since the passing of the Unlawful Internet Gambling Enforcement Act of 2006 (the “Act”) by US Congress on 29 September 2006, the Board and its advisors have undertaken a comprehensive legal and strategic review with regard to the Group’s US operations. The advice received was consistent in substance and concluded that Sportingbet should not continue to provide gaming services to US based residents following the enactment of the legislation by the President of the United States.
Having considered the legal advice received and the options available, the Board concluded that a disposal of the Group’s US-facing sports betting and casino operations together with the closure of its US poker operations was in the best interest of all stakeholders.
The Disposal
Sportingbet announces that it has sold, on 12 October 2006, its US-facing sports betting and casino business (the “US Operations”) to Jazette Enterprises Limited (“JEL”) (the “Disposal”). Sportingbet received cash consideration of US$1 for the shares and related assets of the US Operations, and has discharged excess liabilities amounting to approximately US$13.2 million. Had the business been closed, the Board estimated that the cost of severance and closure would have amounted to approximately US$14.0 million – a total saving of circa US$27.2 million.
Following the Disposal, neither Sportingbet, its Directors nor related parties will have any interest, commercial or otherwise, in JEL or the US Operations.
The US Operations employed over 500 people and the Board understands that JEL intends to preserve the operational structure to all material extent.
Under the terms of the Disposal, Sportingbet will retain the URLs and intellectual property of wallstreet.com, aces.com and sportingbetUSA.com though these will not be used for any US gaming purpose. In addition, JEL has agreed, for a period of two years, not to take bets from non-US residents and for a period of three years, not to take bets from customers outside the Americas region. Further, Sportingbet has retained the details of all non-US resident customers currently registered with the US Operations. Sportingbet will attempt to migrate those customers to its ongoing European business.
The Disposal is subject to a condition precedent that the Act is signed by the President of the United States and becomes law prior to the closing of the 109th Congressional Session. Should the Act not become law by the end of the 109th Congressional Session, JEL is entitled to payment of US$0.5 million, and the US operations will revert back to Sportingbet.
Paradise Poker
Sportingbet will retain the Paradise Poker business, but will, with effect from 11.00am UK time, 13 October 2006, cease taking deposits from US resident customers.
To allow for an orderly wind down of the US Paradise business, Paradise Poker will remain open for US customers for real money poker play utilising their existing account balances for one month. At the end of the month long period, US residents will be prevented from playing real money poker at Paradise. In addition, the Board has taken immediate steps to prevent customers from ten US States where there is law prohibiting internet gambling from playing real money poker at Paradise Poker.
The Group will continue to market Paradise Poker in Canada, Europe and other relevant markets whilst maintaining its “dot net” free to play site for all customers.
Continuing Operations
The continuing operations of Sportingbet will consist of the Group’s existing European sports, casino and poker business, the Australian sports business and the non-US business of Paradise Poker.
The Group will now focus on further development of its European and Australian businesses. The Australian business, now with a greater focus on the retail customer is generating more stable margins and therefore profitability. Across the Group, we will continue to focus our efforts on providing a high quality user experience backed by first class customer service.
Paradise Poker will concentrate on retaining the European based liquidity pool following the reduction in customer numbers from being no longer able to gain access from the US. The reduced customer numbers are expected to have an adverse impact on rake generated by these players. The non-US Paradise Poker platform will roll out multi-language and multi-currency facilities to complement our localised sports and casino offering. Europe will be the primary focus for Paradise marketing as we continue to exploit this high growth market.
The actions taken as a result of the passing of the Act are expected to create a significant exceptional item in the financial year ending 31 July 2007 due to the write down of goodwill and the costs of restructuring. It is the Board’s intention to quantify these before announcing its first quarter results on 29 November 2006.
Commenting on the Disposal, Andrew McIver, Chief Executive designate, said:
“We are saddened to have to dispose of such a fantastic business as a result of political actions in the US Congress. The sale however, prevents significant closure costs which would have been both expensive and time consuming. It also preserves the employment of those of our colleagues who have worked so hard to build the US operations into the highly profitable business it is today.
Sportingbet will now focus on developing its business in other key markets of the world.”
Enquiries:
Sportingbet Plc Tel: 020 7184 1800
Andrew McIver, Chief Executive designate
Simon Gregory, Director of Corporate Finance
Smithfield Consultants Tel: 020 7903 0669
George Hudson
(“Sportingbet” or the “Group”)
Disposal of US Operations
Since the passing of the Unlawful Internet Gambling Enforcement Act of 2006 (the “Act”) by US Congress on 29 September 2006, the Board and its advisors have undertaken a comprehensive legal and strategic review with regard to the Group’s US operations. The advice received was consistent in substance and concluded that Sportingbet should not continue to provide gaming services to US based residents following the enactment of the legislation by the President of the United States.
Having considered the legal advice received and the options available, the Board concluded that a disposal of the Group’s US-facing sports betting and casino operations together with the closure of its US poker operations was in the best interest of all stakeholders.
The Disposal
Sportingbet announces that it has sold, on 12 October 2006, its US-facing sports betting and casino business (the “US Operations”) to Jazette Enterprises Limited (“JEL”) (the “Disposal”). Sportingbet received cash consideration of US$1 for the shares and related assets of the US Operations, and has discharged excess liabilities amounting to approximately US$13.2 million. Had the business been closed, the Board estimated that the cost of severance and closure would have amounted to approximately US$14.0 million – a total saving of circa US$27.2 million.
Following the Disposal, neither Sportingbet, its Directors nor related parties will have any interest, commercial or otherwise, in JEL or the US Operations.
The US Operations employed over 500 people and the Board understands that JEL intends to preserve the operational structure to all material extent.
Under the terms of the Disposal, Sportingbet will retain the URLs and intellectual property of wallstreet.com, aces.com and sportingbetUSA.com though these will not be used for any US gaming purpose. In addition, JEL has agreed, for a period of two years, not to take bets from non-US residents and for a period of three years, not to take bets from customers outside the Americas region. Further, Sportingbet has retained the details of all non-US resident customers currently registered with the US Operations. Sportingbet will attempt to migrate those customers to its ongoing European business.
The Disposal is subject to a condition precedent that the Act is signed by the President of the United States and becomes law prior to the closing of the 109th Congressional Session. Should the Act not become law by the end of the 109th Congressional Session, JEL is entitled to payment of US$0.5 million, and the US operations will revert back to Sportingbet.
Paradise Poker
Sportingbet will retain the Paradise Poker business, but will, with effect from 11.00am UK time, 13 October 2006, cease taking deposits from US resident customers.
To allow for an orderly wind down of the US Paradise business, Paradise Poker will remain open for US customers for real money poker play utilising their existing account balances for one month. At the end of the month long period, US residents will be prevented from playing real money poker at Paradise. In addition, the Board has taken immediate steps to prevent customers from ten US States where there is law prohibiting internet gambling from playing real money poker at Paradise Poker.
The Group will continue to market Paradise Poker in Canada, Europe and other relevant markets whilst maintaining its “dot net” free to play site for all customers.
Continuing Operations
The continuing operations of Sportingbet will consist of the Group’s existing European sports, casino and poker business, the Australian sports business and the non-US business of Paradise Poker.
The Group will now focus on further development of its European and Australian businesses. The Australian business, now with a greater focus on the retail customer is generating more stable margins and therefore profitability. Across the Group, we will continue to focus our efforts on providing a high quality user experience backed by first class customer service.
Paradise Poker will concentrate on retaining the European based liquidity pool following the reduction in customer numbers from being no longer able to gain access from the US. The reduced customer numbers are expected to have an adverse impact on rake generated by these players. The non-US Paradise Poker platform will roll out multi-language and multi-currency facilities to complement our localised sports and casino offering. Europe will be the primary focus for Paradise marketing as we continue to exploit this high growth market.
The actions taken as a result of the passing of the Act are expected to create a significant exceptional item in the financial year ending 31 July 2007 due to the write down of goodwill and the costs of restructuring. It is the Board’s intention to quantify these before announcing its first quarter results on 29 November 2006.
Commenting on the Disposal, Andrew McIver, Chief Executive designate, said:
“We are saddened to have to dispose of such a fantastic business as a result of political actions in the US Congress. The sale however, prevents significant closure costs which would have been both expensive and time consuming. It also preserves the employment of those of our colleagues who have worked so hard to build the US operations into the highly profitable business it is today.
Sportingbet will now focus on developing its business in other key markets of the world.”
Enquiries:
Sportingbet Plc Tel: 020 7184 1800
Andrew McIver, Chief Executive designate
Simon Gregory, Director of Corporate Finance
Smithfield Consultants Tel: 020 7903 0669
George Hudson
xpanda said:
Nah, its just an effort of sportingbet plc to not errode any more of their business via a standard non-compete agreement....you'll see more of this to come. It wouldn't surprise me if they had some sort of handshake agreement that JEL will sell the sportsbooks *back* to SportingBet at some point in the future when the regulatory climate in the US changes.
Online sports wagering isn't going anywhere, and no one is stupid enough to leave the largest single market at $6 billion a year on the table. It's just CYA time for the companies with any risk of legal exposure...
TTinCO said:
First, there was no real rush. Why they did, I dont know. Two, its a banking law and does not effect thier buisness at all.
I believe boiler room 101 techniques were used to pull this sale off.
Best time to buy is when people are scared or panicing. You can get away with murder and the fear you will miss out, is huge. It was used correctly against them. A straight panic sale with no real reason behind it.
The price would be the same next tuesday as it is right now. Save for a full panic weekend during which time US banks will be closed, aint nothing changing.
Many whom have bailed, ran or hid out will regret it deeply as someone esle counts the money bettors will be sending all over the world, NO Matter what.
In fact as the sky starts to pick it self up off the ground by this time next week, a lot of thee places values will go upwards. Slowly at first and then full steam ahead.
No matter what happens, aint nothing happening anytime soon.
Well Sportingbetusa and aces have both sent out emails offering 10% bonuses + gifts this weekend. Not sure why they would do this, if they are closing down those sites to US customers.
Very suprised they don't simply migrate all the non-us customers to a single URL like Aces, and then pay this new company to manage it for them. That would seem to be in everyones best interest.
Very suprised they don't simply migrate all the non-us customers to a single URL like Aces, and then pay this new company to manage it for them. That would seem to be in everyones best interest.
http://biz.yahoo.com/prnews/061012/to230.html?.v=37
Press Release Source: Sportsbook.com
Sportsbook.com guarantees "business as usual" as company is bought by management and private investors
Thursday October 12, 8:15 pm ET
DUBLIN, Ireland, Oct. 12 /PRNewswire/ - The management team of Sportsbook.com, the largest online sportsbook and casino on the planet, today announces its successful leveraged management buyout of sportsbook.com and other U.S. facing brands from Sportingbet Plc. Sportsbook.com will now operate as a private company with offices in Dublin, Antigua, Vancouver and San Jose, Costa Rica.
As a result of new U.S. legislation aimed at preventing financial institutions from handling transactions with online gaming companies, Sportsbook.com's parent company Sportingbet Plc has decided to cease accepting wagers from customers in the United States, effective immediately.
Sportsbook.com, now in private hands, remains open for business for its customers. Sportingbet sold sportsbook.com to the existing management team and a group of investors who will continue to run the company in the same innovative way that has twice earned it eGaming Review's award as the number one U.S. facing sportsbook.
Transactions continue to remain secure, all personal information remains completely confidential and customer accounts are safe.
Sportsbook.com values the support and enthusiasm of its customers and the new owners of the company intend to respect and continue to earn their trust.
About Sportsbook.com:
Sportsbook.com is the largest sports book and casino on the planet, where millions of adult Americans bet on sports, play poker and enjoy blackjack and other casino games online in a secure environment.
Twice named the "Best US Sports Book" by the industry's top magazine (2005, 2006), eGaming Review, Sportsbook.com has been leading the online gaming industry since 1996. Dwarfing its nearest competitors in the US, Sportsbook.com has been the first to achieve every significant industry milestone, from record turnover to active users to number of bets - achieving a peak of fifteen bets per second. As the US online gaming leader, the firm and its products have been featured on CBS 60 Minutes, CNN, ESPN, Wall Street Journal, Barron's, Financial Times, USA Today and in every major newspaper in the US.
Sportsbook.com is now privately owned with offices and representatives in Costa Rica, Ireland, Antigua and Canada. Recognized for its outstanding service to its customers, the management team who built the brand remains in place, committed to providing the same excellent service.
--------------------------------------------------------------------------------
Source: Sportsbook.com
Press Release Source: Sportsbook.com
Sportsbook.com guarantees "business as usual" as company is bought by management and private investors
Thursday October 12, 8:15 pm ET
DUBLIN, Ireland, Oct. 12 /PRNewswire/ - The management team of Sportsbook.com, the largest online sportsbook and casino on the planet, today announces its successful leveraged management buyout of sportsbook.com and other U.S. facing brands from Sportingbet Plc. Sportsbook.com will now operate as a private company with offices in Dublin, Antigua, Vancouver and San Jose, Costa Rica.
As a result of new U.S. legislation aimed at preventing financial institutions from handling transactions with online gaming companies, Sportsbook.com's parent company Sportingbet Plc has decided to cease accepting wagers from customers in the United States, effective immediately.
Sportsbook.com, now in private hands, remains open for business for its customers. Sportingbet sold sportsbook.com to the existing management team and a group of investors who will continue to run the company in the same innovative way that has twice earned it eGaming Review's award as the number one U.S. facing sportsbook.
Transactions continue to remain secure, all personal information remains completely confidential and customer accounts are safe.
Sportsbook.com values the support and enthusiasm of its customers and the new owners of the company intend to respect and continue to earn their trust.
About Sportsbook.com:
Sportsbook.com is the largest sports book and casino on the planet, where millions of adult Americans bet on sports, play poker and enjoy blackjack and other casino games online in a secure environment.
Twice named the "Best US Sports Book" by the industry's top magazine (2005, 2006), eGaming Review, Sportsbook.com has been leading the online gaming industry since 1996. Dwarfing its nearest competitors in the US, Sportsbook.com has been the first to achieve every significant industry milestone, from record turnover to active users to number of bets - achieving a peak of fifteen bets per second. As the US online gaming leader, the firm and its products have been featured on CBS 60 Minutes, CNN, ESPN, Wall Street Journal, Barron's, Financial Times, USA Today and in every major newspaper in the US.
Sportsbook.com is now privately owned with offices and representatives in Costa Rica, Ireland, Antigua and Canada. Recognized for its outstanding service to its customers, the management team who built the brand remains in place, committed to providing the same excellent service.
--------------------------------------------------------------------------------
Source: Sportsbook.com
sean1 said:
Due to a pseudo-non-compete clause with the purchaser. They agree to not take any non-US customers for two years, and no non-Americas customers for three years.
So that effectively blocks out all Canadians from the books that have been sold off. I suppose the idea is to try to migrate the non-Americans to their non-US-facing books.
