Eleventh Hour Sale For SportingBet
Published: Friday, October 13, 2006 Online-Casinos.com
ELEVENTH HOUR SALE FOR SPORTINGBET
Betting group has sold the U.S. operations of its Sportsbook.com online casino to existing managers and a group of private investors
As we went to press this week the news was coming in that the London listed betting giant Sportingbet plc, the owner of Paradise Poker, had sold its operations in the U.S.
According to a statement from the company Jazette Enterprises Ltd. bought the company's U.S. sports betting and casino operations for $1. The sale relieves Sportingbet of $13.2 million in liabilities.
Sportsbook.com said it would now operate as a private company with offices in Dublin, Antigua, Vancouver and San Jose, Costa Rica.
The company statement referred to the ongoing strategic review of the US and business situation in which the company finds itself, and the conclusion of the board of directors that Sportingbet should not continue to provide gaming services to US based residents following the enactment of the legislation by the President of the United States.
Having taken extensive advice, the directors had decided that a disposal of the group’s US-facing sports betting and casino operations together with the closure of its US poker operations was in the best interest of all stakeholders, the statement continued.
The group had therefore sold, on 12 October 2006, its US-facing sports betting and casino business to Jazette Enterprises Limited (“JEL”).
"Sportingbet received cash consideration of US$1 for the shares and related assets of the US operations, and has discharged excess liabilities amounting to approximately US$13.2 million. Had the business been closed, the Board estimated that the cost of severance and closure would have amounted to approximately US$14.0 million – a total saving of circa US$27.2 million," the statement reveals.
Sportingbet emphasises that following the completion of the deal, neither Sportingbet, its Directors nor related parties will have any interest, commercial or otherwise, in JEL or the US operations.
"The US Operations employed over 500 people and the Board understands that JEL intends to preserve the operational structure to all material extent," the statement says.
Under the terms and conditions of the deal, Sportingbet will retain the URLs and intellectual property of wallstreet.com, aces.com and sportingbetUSA.com though these will not be used for any US gaming purpose. In addition, JEL has agreed, for a period of two years, not to take bets from non-US residents and for a period of three years, not to take bets from customers outside the Americas region. Further, Sportingbet has retained the details of all non-US resident customers currently registered with the US Operations. Sportingbet will attempt to migrate those customers to its ongoing European business.
One important pre-condition to the deal is that it comes into effect only when the U.S. president signs into law the Unlawful Internet Gambling Enforcement Act. Should the Act not become law by the end of the 109th Congressional Session, JEL is entitled to payment of US$0.5 million, and the US operations will revert back to Sportingbet.
Sportingbet will retain the Paradise Poker business, but will, with effect from 11.00am UK time, 13 October 2006, cease taking deposits from US resident customers, but to allow for an orderly wind down of the US Paradise business, Paradise Poker will remain open for US customers for real money poker play utilising their existing account balances for one month.
At the end of the month long period, US residents will be prevented from playing real money poker at Paradise. In addition, the Board has taken immediate steps to prevent customers from ten US States where there is law prohibiting internet gambling from playing real money poker at Paradise Poker.
Sportingbet will continue to market Paradise Poker in Canada, Europe and other relevant markets whilst maintaining its “dot net” free to play site for all customers. Paradise Poker will concentrate on retaining the European based liquidity pool following the reduction in customer numbers from being no longer able to gain access from the US, although the reduced customer numbers are expected to have an adverse impact on rake generated by these players. The non-US Paradise Poker platform will roll out multi-language and multi-currency facilities and Europe will be the primary focus for Paradise marketing.
The continuing operations of Sportingbet will consist of the group’s existing European sports, casino and poker business, the Australian sports business and the non-US business of Paradise Poker, and there will now be renewed focus on further development of the European and Australian businesses.
Commenting on the sale, Andrew McIver, Chief Executive designate, said: “We are saddened to have to dispose of such a fantastic business as a result of political actions in the US Congress. The sale however, prevents significant closure costs which would have been both expensive and time consuming. It also preserves the employment of those of our colleagues who have worked so hard to build the US operations into the highly profitable business it is today. Sportingbet will now focus on developing its business in other key markets of the world.”
Following the Sportingbet announcement, American employees of Sportsbook.com were active in the States, telling several journalists and industry observers that "Sportsbook.com is open for business as usual. Better than usual, in fact, see below," followed by attractive bonus offers. The employees revealed that Sportsbook.com has been bought by the existing management team and a group of investors who are continuing in business, and underlined the company’s award-winning service and efficiency which will continue unchanged.
