888 Slumps
Posted by Thomas O'Toole | Filed under Uk Consumer Gambling, UK
888 Holdings has reported a slump in pre-tax profits and has accordingly decided to forgo an interim dividend payment. The company also reported a 39 per cent drop in earnings before interest, tax, depreciation and amortisation to £12.6m. The company blamed the slump on seasonal softness in the online poker market, fluctuating currency exchange and the fact that the World Cup distracted many punters away from playing such things as online casinos. Online Poker revenue fell from $26.2m to $19.6m during the period under review, with Bingo generating $23.5m, and casino revenues increasing from $55.9m to $59.3m. Marketing expenditure increased to $48m, compared with $35m in the first half of 2009. Pre-tax profit fell 56 per cent to $4.3m, whilst earnings per share dropped from 2.3 cents in the comparable period in 2009 to just 0.8 cents. The big questions remain; is the decline in online poker seasonal and to what extent has the World Cup just simply masked what is actually long term structural decline? Is 888 really part of the so called consolidation process, when it has still not settled with the US Department of Justice? Could the likes of Ladbrokes and William Hill even afford to buy 888 should they so want to? And what of 888's marketing budget; is the 888 brand really strong enough to see it scaled back? A clear case of more questions that answers, despite the bests efforts of Mr Levy. 888 shares ended the day at 37p on six million shares traded.
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Swedish Law
July 08 2010 saw the Court provide a ruling in Joined Cases C-447/08 and C-448/08, "REFERENCES for a preliminary ruling under Article 234 EC from the Svea hovrätt (Sweden), made by decisions of 8 October 2008, received at the Court on 13 October 2008, in criminal proceedings against Otto Sjöberg (C-447/08) and Anders Gerdin (C-448/08)." At the material time, Mr Sjöberg was the editor-in-chief and the publisher of the Expressen newspaper. In that capacity, he had sole responsibility for the publication by that newspaper, between November 2003 and August 2004, of advertisements for gambling organised abroad by the companies Expekt, Unibet, Ladbrokes and Centrebet. Mr Gerdin, for his part, was, at the material time, the editor-in-chief and publisher of the Aftonbladet newspaper. In that capacity, he had sole responsibility for the publication by that newspaper, between November 2003 and June 2004, of advertisements for gambling organised abroad by those companies.
The Åklagaren (Public Prosecutor?s Office) subsequently took proceedings against Mr Sjöberg and Mr Gerdin for infringement of Paragraph 54(2) of the Loterrilagen, for having promoted, unlawfully and for profit, the participation of Swedish residents in gambling organised abroad. On 21 June and 6 September 2005, Mr Sjöberg and Mr Gerdin were each ordered by the Stockholms tingsrätt (District Court, Stockholm) to pay a criminal penalty of SEK 50 000 in respect of infringement of the Lotterilag. Mr Sjöberg and Mr Gerdin both appealed against the judgment concerning them before the Svea hovrätt (Court of Appeal)and the Svea hovrätt decided to stay the proceedings and to refer to the Court.
The Court in this instance ruled that Article 49 EC must be interpreted as not precluding legislation of a Member State, such as that at issue in the main actions, which prohibits the advertising to residents of that State of gambling organised for the purposes of profit by private operators in other Member States. However, the Court also said that if it is ture that persons carrying out the promotion of gambling organised in Sweden without a licence incur penalties which are less strict than those imposed on the persons who advertise gambling organised in other Member States, then those arrangements are discriminatory and the provisions of Paragraph 54(2) of the Lotterilag are contrary to Article 49 EC and, consequently, unenforceable against the persons being prosecuted in the main actions; "Article 49 EC must be interpreted as precluding legislation of a Member State subjecting gambling to a system of exclusive rights, according to which the promotion of gambling organised in another Member State is subject to stricter penalties than the promotion of gambling operated on national territory without a licence. It is for the referring court to ascertain whether that is true of the national legislation at issue in the main actions."
Betting Europe
"Be careful what you wish for. You might just get it." Online bookmakers that have spent the past ten years campaigning for an open, liberalised European betting market, are finding the going tough in those markets that have already become partially liberalised. On Thursday 27 May 2010 Sportingbet said; "Legislation to issue license to permit online sports betting, online horse betting and poker for customers resident in France was adopted by the French Parliament on 6 April, 2010. Online casino and games of chance are not permitted. The law was enacted on 14 May 2010 and in compliance with the legislation the Group stopped taking wagers from French resident customers. The Board of Sportingbet hope the licensed market, with greater freedom to advertise, along with greater acceptance of the online gaming market will lead to market growth. Subject to concluding on the economic viability of operating under the new licensing and tax regime, the Group intends to apply for licenses to operate sports betting, pari-mutuel horse race betting, and poker. As the license issue process and the detailed regulations are only just being published, it is unlikely that the Group will be able to satisfy the French regulatory requirements until early in 2011. In the 9 month period to 30 April 2010, the Group earned a contribution of £2.6m from £6.0m of Gross Gaming Revenues ("GGR") derived from the Group's French language site. Approximately 60% of GGR was derived from sports betting, 15% from poker and 25% from casino. In total, GGR from France accounted for approximately 3.5% of Group GGR."
HR 2267 Passed
Barney Frank's Online Gambling Bill, HR 2267 was debated by the House Financial Services Committee yesterday. The bill was passed (41-22) following several amendments. Despite the usual euphoria, it should be noted that it must pass the House of Representatives and the Senate before being passed into law. Whilst there have also been claims that the bill, if passed, could be transformational for UK listed online gambling operators, this is of course a nonsense as there is no clarity as regards whether they would even be allowed to apply for licences. Moreover, the scale and scope of the Vegas boys will enure that it is encumbents that will benefit from any liberalisation. One of the amendments to the Bill reads "fails to certify in writing, under penalty of perjury, that the applicant or other such person, and all affiliated business entities, has through its entire history:(i) not committed an intentional felony violation of Federal or State gambling laws; and (ii) has used due diligence to prevent any U.S. person from placing a bet on an internet site in violation of Federal or State gambling laws. All entities under common control shall be considered affiliated business entities for the purpose of this subparagraph.” Other amendments suggest that Sports betting will still be prohibited, minors will be protected, bets can only be made with pre paid or debit cards. The timing and outcome of the proposed changes are impossible to predict.Italy
Online gambling revenue in the Italian betting market rose by 31.3% to €319.1 million in July compared with €242.9 million in the same period last year but decreased by 14% from the €371 million repoprted in June 2010. Online sports betting revenue rose 34.1% to €58.6 million in July from €43.7 million in the same period last year but decreased by 41.4% compared to €100.1 million in June 2010.
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