888.com weathering the UIGEA storm


RIP Brian
Feb 22, 2001

Expansion into new markets starts to take up the American slack

The Gibraltar-based online gambling group 888.com has illustrated that last October's loss of its U.S. business as a result of the Unlawful Internet Gambling Enforcement Act can to some extent be offset by aggressive expansion into other markets.

UK business media appeared in positive mood about the companys future prospects following the release of the results, in which 888 Holdings Plc said fourth-quarter sales from countries outside the U.S. rose 12 percent as revenue from Internet poker climbed.

The group saw revenue from gaming rise by 7 percent in 2006, despite the US shutdown. In a trading update, 888.com revealed that net gaming revenue for the 12 months to 31 December reached $290 million (GBP148 million) compared with $271 million the year before.

888 said it was diversifying geographically in the wake of a US law late last year which effectively banned internet financial transactions with online gambling sites.

But it added that the number of new depositors was down since October.

Revenue from non-U.S. operations rose 28 percent to $157 million. However, after suspension of 888's US business in October 2006 average daily first time depositors fell by 37 percent. Nevertheless, the online gambling giant reported solid growth, with 3.6 million members now betting online, and a 35 percent increase in real money memberships in its final quarter results for 2006.

"We are encouraged by the strong current trading and remain confident for a successful full year outcome,'' Chief Executive Officer Gigi Levy said in the statement.

Shares of 888 have dropped 24 percent since Sept. 29, the last day of trading before the U.S. law was passed.

"Following our exit from the US market in the fourth quarter of 2006, the company has worked hard to continue expanding its non-US business," 888 said in its update. Recent developments include launching a new real-money casino in February this year.

In broadening its scope, the firm acquired a betting licence in Italy in December as well as starting a casino website using Spanish and German. In December, 888 secured an online sports-betting license in Italy and in January it introduced its Casino-on-Net site in Spanish and German.

Rileyspoker.com, a U.K. joint-venture with the 168-outlet snooker and poker chain Rileys, will provide a "stepping stone'' for customer recruitment, 888 said.

The question of the long-rumoured merger with Ladbrokes was dealt with in passing, revealing only that there was "no further update" on talks between the two firms.

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