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August
Betcorp hangs up on American punters
Aug 14, 2006
Betcorp, the AIM-listed online gaming company, has stopped taking
telephone bets from American residents, and is reviewing its US-facing
businesses in the wake of the racketeering and corruption allegations
that have besieged its sector rival BetOnSports.
The US business accounts for up to 85 per cent of the total and
telephone bets 9 per cent of revenues.
Colin Walker, the chief executive, told Times Online that Betcorp
continues to monitor its American-facing businesses in the light
of continued uncertainty about the legality of online gaming.
"We're registered in Antigua, where we take bets. The view
we'd understood from our legal advisers was that we had been acting
legally and appropriately. Recent events have cast that into doubt,"
Mr Walker said.
Betcorp shares lost more than 40 per cent of their value following
the arrest in Texas last month of BetOnSports chief executive David
Carruthers, said it was taking steps to minimise the legal risks
associated with the American market "to the maximum extent
practical".
The company's US-facing businesses account for between 80 and 85
per cent of its revenues.
Mr Walker maintained that the company was highly cash generative
and would expand geographically outside the US. He said the focus
would be on markets in Europe.
He also said that trading in the wake of Mr Carruthers' arrest,
a period not covered by the company's interim results published
today, had remained strong. "Trading has been very good. It's
a big marketplace. We feel it has been very positive across all
areas," Mr Walker said.
Sentiment over online gaming was thrown into turmoil last month
following the arrest of Mr Carruthers by the American authorities.
He vigorously denies any wrongdoing but was subsequently sacked
by the company.
No longer taking bets from US customers will have "an adverse
effect on sports betting turnover but will partially offset by personnal
and telecommunication cost reductions and the migration of telephone
activity to the internet", Betcorp said.
The company maintained that just "a handful" of jobs will
have been lost as a result of ending telephone betting in the US.
"We anticipate that the overall effect on profitability will
not be material," Betcorp added.
Disclosure of the move to end US telephone bets came as Betcorp
reported a 146 per cent jump in pre-tax profits to $4.6 million
during the six months to the beginning of July, a period prior to
the apparent crackdown on online gaming by the US authorities.
Betcorp said total gross revenues from players rose 75 per cent
to $22 million and active customers increased by a third during
the period to 27,281.
Source Code: http://business.timesonline.co.uk/article/0,,9070-2312480,00.html
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