A cursory glance at the results recently posted by a number of the leading online betting companies, reveals a picture of intense competition; reflected in increased operating costs and marketing budgets, high customer acquisition costs; reduced yields per player and reduced revenues and profitability.

Unibet Group plc recently released its year end report for the period January - December 2007. Profit before tax for the fourth quarter of 2007 amounted to GBP 2.7, compared with 7.4 million for the same period in 2006. Profit before tax for full year 2007 amounted to GBP 20.0 compared with 28.5 million in 2006. Profit after tax for the fourth quarter of 2007 amounted to GBP 2.3 (23.1) million. Profit after tax for the full year 2007 amounted to GBP18.7 (37.9) million.

During the fourth quarter of 2007, ongoing operating costs were GBP 16.0 (10.6) million and during the full year 2007 GBP 51.9 (40.1) million.

Profit from operations for the fourth quarter of 2007 was GBP 3.7 (7.5) million. Profit from operations for the full year 2007 was GBP 21.4 (28.6) million. Earnings before interest, tax and depreciation and amortisation (EBITDA) for the fourth quarter of 2007 was GBP 5.1 (8.0) million and for the full year 2007 EBITDA was GBP 25.9 (31.5) million.

When recently announcing its results for the 53 weeks ended 1 January 2008, William Hill said that online casino revenues were lower than last year in part reflecting a cannibalisation of casino revenue by arcade games and also a lower average yield per player. The company also said that online poker had had a difficult first 6 months of the year.

When announcing its preliminary statement of results for the year ended 31 December 2007, Ladbrokes said that yield per unique active online casino player was down 9.7% at £411. Operating costs in the online segment were up approximately 6.5%, with marketing costs increasing by £2.8 million (16.2%). The company said that the cost per customer acquisition had risen, reflecting a higher level of competition in its key markets.

Ladbrokes also said that the competitive landscape remains tough for Poker with high customer acquisition costs and margins squeezed by rakeback and other promotional offers. Poker net revenue at the company declined by 11.4% to £31.0 million. Unique active players for the year were down 1.9% at 151,000 and yield per unique active player was down 9.7% to £205. Net revenue for the second half declined year on year by 7.8% to £15.3 million.

At Rank, which also recently announced its financial results for the 12 months ended 31 December 2007, the company said that its sports betting business had had a difficult year, with revenue slipping 6.2% to £15.2m. In recent times we have also seen the demise of the internet betting company Betandgame, whilst it is known that Neville Porter, amongst other small betting companies, is coming under pressure. And the Australian based Canbet.Com recently returned a negative EBITDA of $4.1M during the first half of the year. (The obvious exception to the rule is Paddy Power which recently reported online gross win growth of 41% for the year to December 2007, including gaming gross win growth of 44%.).

When announcing its unaudited results for the second quarter ended 31 January 2008, Sportingbet said that poker had contributed £6.1m to both amounts wagered and net gaming revenue, compared with £7.2m during the same period last year.

When reporting preliminary results for the year ended 31 December 2007 32 Red PLC said that whilst the number of its active poker players had increased to 14,753 in 2007, up 6.6% on the prior year, "in line with industry trends Poker player yield decreased to £82 (2006: £95) reflecting the increasingly competitive poker market resulting in a small overall decrease in Poker revenues to £1.2m, down 7.3% on 2006".

PartyGaming, recently reported that operating profit moved into a loss of $20.7m for the year ending December 2007; with Poker revenue just up by 9%.

Don't believe the hype...these guy are coming under pressure on all fronts and it can only get worse. Only this week Genting Stanley announced that its new online gaming business would commence during the later part of the second quarter of 2008, whilst 888 announced the launch of www.888sport.com, a pan-European sports betting offering, developed with Blue Square, the interactive gaming and betting division of Rank Group Plc.

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