Sportingbet exits U.S. by selling out for $1

[Lord_Have_Mercy]

Friday October 13, 4:51 AM EDT


By Pete Harrison

LONDON (Reuters) - Britain's Sportingbet Plc has pulled out of the United States ahead of a ban on Internet gambling by selling its U.S. operations to private investors for $1.

"We are saddened to have to dispose of such a fantastic business as a result of political actions in the U.S. Congress," Sportingbet Chief Executive designate Andy McIver said on Friday.

"Sportingbet received cash consideration of $1 for the shares and related assets of the U.S. operations, and has discharged excess liabilities amounting to approximately $13.2 million," it said in a statement.

The exit from the United States comes after Republican legislators delivered a heavy blow to Internet gambling this month when Congress unexpectedly approved a bill to enforce prohibition of online gaming.



President George W. Bush is expected to sign the measure into law later on Friday.

Sportingbet's shares rose by 5 percent to 68-1/2 pence by 0947 GMT, valuing the group at almost 290 million pounds ($540 million) -- down considerably on the group's value of 1.6 billion pounds in July before the U.S. started its clampdown on Internet gaming.

"We think this is a good deal for Sportingbet shareholders, which removes a small level of uncertainty and should help conserve the group's net cash," analysts at Numis Securities said.

The analysts said they had stripped out 13.1 million pounds of anticipated profit from Sportingbet's U.S. operations to give a new group pretax profit forecast of 20.8 million in 2007.

The online gaming industry is now splitting between London-listed companies, which are pulling out of the United States, and privately owned businesses that are prepared to take illegal U.S. bets offshore.

Sportingbet's U.S. operation, Sportsbook.com, was sold to Jazette Enterprises Ltd and will now operate as a private company with offices in Dublin, Antigua, Vancouver and Costa Rica.

Sportingbet will retain its Paradise Poker business, but will stop accepting U.S. money later on Friday.

"Had the business been closed, the board estimated that the cost of severance and closure would have amounted to approximately $14 million -- a total saving of circa $27.2 million," it added.

[EasyRhino]

Yep, I got the email from sportingbetusa informing me of the management buyout.

I like how the parent corp saddled the spinoff with some of their debt before selling. Clever accounting move.

[Simmo!]

A logical progression IMO. The only possible move a PLC can make if they want to continue to target the US market is to move US-facing gambling operations into private ownership. Clearly there will be internal "interests" in these new companies and contracts no doubt with a "longer term view" in mind

I think we will see a fair bit of this and consequently the re-emergence of some of the "banned" casinos in the US, albeit with State restrictions. I'm particularly intrigued as to what Cryptologic (or Playtech for that matter) will do. There must surely be massive pressure from one or two of their licencees.