Gaming VC year-end: Betboo buy hits profit
Gaming VC posted a 7% rise in net gaming revenue for 2009 to 54m, from 50.1m the previous year, but was unable to prevent pre-tax profit falling to 13.8m from 16.9m, due to costs associated with its July 2009 acquisition of South America operator Betboo.
GAMING VC posted a 7% rise in net gaming revenue (NGR) for 2009 to 54m, from 50.1m the previous year, but was unable to prevent pre-tax profit falling to 13.8m from 16.9m, due to costs associated with its July 2009 acquisition of South America operator Betboo.
Non-cash items and exceptional charges arising from the operator’s acquisition of Betboo hit the company’s bottom line to the tune of 2.6m in 2009. Earnings before interest, tax, debt and amortisation (EBITDA) were also hit by “continued expansion into new business lines with lower margins and increased marketing spend on the mature Casino Club business,” said the company.
Chief executive Kenny Alexander said: “We’re maintaining the revenues and the profitability from the German business as best we can, using those to pay dividends to shareholders, with anything left over invested outside of Germany. The growth story is of the European sportsbook and the South American business. We’re looking to replicate the success we’ve had in Italy with Betaland in a few markets in Europe, and Jim Humberstone [ex head of sportsbook for Sportingbet] has been recruited to do that. We’ve also maintained the Betboo management team and will be stepping up investment in that business.”
The company’s diversification outside of its core German-facing Casino Club offering, enforced by the egaming ban in that territory following the passage of the Interstate Gambling Treaty on 1 January 2008, continued apace during 2009, generating 45% of NGR, compared to 27% in 2008, also falling to 25% of overall contribution, compared to 7.5% the previous year. Casino Club revenues fell 18.8% during 2009 to 29.6m, which the company blamed on the economic crisis affecting player yields, particularly at VIP levels, and restrictions on its ability to advertise and therefore grow the business outside of its maturing Casino Club customer base.
Gaming VC’s planned expansion of the Casino Club brand outside the German-speaking markets – for which it recruited ex-PartyGaming CMO John Salmon in January to spearhead “ had also been delayed by one of two disputes with software provider Boss, which provides software to Casino Club and its Betaland Italian-facing website, revealed the operator. Gaming VC said it now expects to invest 5m on the Casino Club marketing push during 2010, 2m less than earlier anticipated.
The first of the disputes with GTech G2-owned Boss Media relates to alleged infringement of the Group’s intellectual property, said the company, for which it said it would institute court proceedings if this was not resolved, and the second over the ability of Boss to terminate its contract to provide poker and downloadable casino to Gaming VC’s Malta-licensed, Italian-facing Betaland dot.com site. Alexander however told EGRMagazine.com he was unable to comment further about the disputes at this time.
Betaland was the betting and gaming group’s star performer in 2009, generating profit of 1.7m, compared to a loss of 1.2m in 2008, generating 20.8m in NGR, a 55% increase on the 13.4m recorded in 2008. 9.1m of this came from sports and 11.7m from gaming.
Revenues from Betboo continued to decline slightly since its acquisition last July, falling from 1.13m in the third quarter of 2009, to 1.03m in the first quarter of 2010, which the company said reflected minimal marketing invested into the brand to date. Betboo’s customer base however continued to grow strongly, said Alexander, actives increasing from 3,391 in January, to 4,058 in March 2010, and new funded from 637 in January to 871 in March.
The company’s intended re-domiciliation from Luxembourg to the Isle of Man also remains on track, said the company in a statement. Subject to shareholder approval, the company said it expected the new Isle of Man-based holding company to be admitted to the AIM market of the London Stock Exchange in late May 2010.