Sportech focuses on "much bigger" US opportunity
Disposal of loss-making egaming business clears path for increased investment in US operations at Sportech
Sportech CEO Ian Penrose said the firm is focused on opportunities in the US after the “disappointing” sale of its egaming arm in October with an aggressive marketing campaign planned for its Connecticut launch.
The company sold its loss-making gaming arm in October to Netplay TV for £3m soon after completing a long-winded migration of all products to Playtech’s platform, citing insufficient scale and the looming UK Point of Consumption tax as reasons for the move.
The Vernons casino, poker and bingo brands posted losses of £0.7m for the six months ended 30 June 2013 and Sportech said it had continued to operate at a deficit during H2.
Attention has instead focussed on the US, where Penrose claimed the company’s Sportech Racing arm has “much bigger” opportunities.
“We were very conscious over the past six months that trading was difficult,” Penrose told eGaming Review. “Our gaming brand was not well known in the online space and we were competing with much larger marketing budgets which we felt would only become more competitive next year.”
“[Selling the business] was disappointing given the challenges we overcame to get on the Playtech platform, but we have to keep looking forward. In the US we have a competitive advantage, but our Vernons brand did not have that, so we took a view to focus on the US rather than invest in trying to turn around a loss-making business.”
In its interim results statement released today, Sportech said it continues to trade in line with expectations for the full year, and highlighted the launch of its first B2C horseracing site in Connecticut as a sign of things to come.
The site was soft launched over the summer and will receive a full launch in time for the New Year, backed by an “aggressive” marketing campaign.
Penrose said the company’s unique licensing position in the US, where it provides betting services for more than half of all horseracing events, means more B2C launches are possible.
“Once the model is proven then we will certainly look to take that model elsewhere,” he said.
Its European B2B business meanwhile continues to expand, including the integration of Data Tote, the online and on-track betting services firm for an initial consideration of £3.1m, while the implementation of its parimutuel tote wagering system with Danske Spil is running to schedule.