Sportech looks to US sports betting after “bruising” 2017
London-listed firm hopes the legalisation of US sports betting will spark a turnaround after annual losses of £23.2m
Sportech this morning hailed its US-focused growth strategy after a tough 2017 saw the operator report a statutory pre-tax losses of £23.2m for the year.
The loss came in stark contrast to the £63.6m profit levels of 2016, while full-year revenues slipped to £66.3m, down 2%cc from last year.
Adjusted EBITDA also fell to £6.7m from £8.5m.
The down year included the £83m sale of Sportech’s Football Pools business in March 2017 which kickstarted the group’s strategic focus on the US sports betting market.
It has since despatched several non-US businesses including a £3.1m joint venture sports gaming business in India after the board decided it had “ongoing costs with limited potential for returns”.
The firm now believes it is “well positioned for a liberalised US sports betting market opportunity” and is considering a switch to dollars as its reported currency under new CEO Andrew Gaughan.
Former CEO Ian Penrose resigned amid a management restructure during a turbulent year for Sportech where its share price also tanked 54% last month after the pools betting specialist failed to find a buyer during its sale process.
But the group predicted a better year ahead, with plans to launch a sportsbook in Connecticut should sports betting be liberalised in the US.
Non-executive chairman Richard McGuire said: “The senior management team remain resolute in its proactive campaign with the Connecticut General Assembly and associated stakeholders in positioning Sportech as the obvious licensee to conduct sports betting within that State.
“The Group is well advanced in securing a sportsbook partner in anticipation of regulatory easing and the Board assures shareholders that the core management team continues to provide testimony, evidence and insight to the political debate on this critical topic.
“In addition, the senior management team have commenced discussions with their business clients and others across the US in preparing them for the opportunities and challenges ahead.”
Sportech CEO Gaughan added: “2017 was a year of material change for Sportech and 2018 is shaping up to be one of significant opportunity.
“Our recurring revenue in our racing and digital business is further being enhanced by additional sales opportunities.
“We have an enhanced platform for growth in our venues division and both should see benefit from a liberalisation of sports wagering in the US,” he added.
Regulus Partners analyst Paul Leyland said the firm had endured a “bruising year after a bruising decade.”
“However, there are signs that this process has been cathartic and leaves a business which must deliver operationally to reverse decades of stagnation and decline,” he said.
“PASPA is a powerful strategic opportunity, but the real test now is transforming Sportech into a capable organic business able to deliver sustainable growth,” he added.