9/11 Bad Day For Sportingbet Shares
Published: Tuesday, September 12, 2006 Online-Casinos.com
9/11 A BAD DAY FOR SPORTINGBET SHARES
Stock price dives as online gambling group's shares emerge from suspension.
The week started with bad news for the Sportingbet group as its shares were again opened to trading on the London market and took a big hit in the form of a decline. Share prices fell 951/2p to 1431/2p, a drop of 40 percent, a two year low and one of 70 percent down from the company's all-time high of 445p posted in May 2006.
The shares had been suspended since last Thursday at the request of the company following the shock arrest of non-executive chairman Peter Dicks in the USA (see previous Online-Casinos.com and InfoPowa reports)
Sources close to the company insisted it was important that it restarted trading, thus sending out a message that it was business as usual. They pointed out that by re-listing the shares Sportingbet was clearly differentiating itself from its smaller, crisis-hit rival BetonSports, also caught up in the apparent US clamp-down on internet betting.
The promising moves by Sportingbet toward a takeover of World Gaming plc announced last week (see previous Online-Casinos.com and InfoPowa reports) seemed to be in limbo as Sportingbet fought to regain the confidence of investors rattled by what is being portrayed in media reports as a concerted crackdown on online gambling in the United States.
Many analysts seemed to feel that negotiations for World Gaming will come to nothing in the short term, with World Gaming closing at 62.5p Monday, half a penny better but still 40 percent below the implied GBP 56.6 million offer value.
More than GBP 400 million was wiped off the value of Sportingbet as the day closed, an unusual trend for a company that boasted a 55 percent increase in first-quarter pre-tax profits to the end of April.
Sportingbet spokesmen said the legal situation and the events surrounding the arrest of Peter Dicks were being closely studied and followed, but stressed that the company was continuing to operate as normal. It said there was no question of Dicks being removed, although day-to-day business is being handled by Andy McIver, the finance director, who has taken over as chief executive-designate.
Spokesmen also emphasised that there was no connection between the BetonSports (see previous Online-Casinos.com and InfoPowa reports) case and its own, and confirmed that Sportingbet lawyers were still trying to ascertain the exact nature of the alleged problem. The general charge from Louisiana which led to the arrest of Peter Dicks covers internet sites that "conduct as a business ... any game contest, lottery, or connivance whereby a person risks the loss of anything of value in order to realise a profit".
Dicks is due to appear at a hearing in New York on Thursday this week, where he has said that he intends to "vigorously contest" any attempt to transfer him to Louisiana, where the warrant for his, and it is believed other as yet un-named executives, was originally issued.
Spokesmen emphasised again that: "Neither Mr Dicks nor the Sportingbet group has ever received any previous correspondence from any authority within the state of Louisiana regarding this, or any other related matter."
Dicks's high powered legal team is expected to argue that the British businessman should never have been arrested because he was a non-executive director and was travelling to a board meeting of the Nasdaq-listed Standard Microsystems, of which he is also a director.
They will also point out that he is being pursued by a state that allows state-run lottery terminals and video lottery machines that are commissioned and controlled by the gaming enforcement division of the state police! Unlike David Carruthers, the former BetOnSports chief executive, who is being pursued by the Department of Justice, the alleged offence committed by Dicks is a state and not a federal charge.
