Betcorp In Talks With Prospective Buyers

Published: Monday, October 16, 2006 Online-Casinos.com

BETCORP IN TALKS WITH BUYERS FOR U.S. ONLINE GAMBLING INTERESTS

London listed betting group to cut staff by a third and halt U.S. advertising

The Australian-based and London listed betting group Betcorp announced today (Monday) that it has suspended all U.S. operations, plans to cut staff by a third and is in talks with unnamed but "unconnected" suitors for the sale of its U.S.-faced business.

Betcorp is just one of a number of public companies in the industry that have seen share prices and company values dive dramatically in the wake of the Unlawful Internet Gambling Enforcement Act, which seeks to curb online gambling financial transfers in the United States, a major market for the companies involved.

Betcorp said it suspended the accounts of United States residents in response to the new law and was now in talks to sell the business. This had been slowed by the need to adhere to AIM and Australian stock exchange regulations regarding the approval of shareholders, and regulatory approval from Antigua where the company is licensed.

Any sale will be conditional upon the purchaser assuming full liability for all customer deposits and staff contracts. "Pending the conclusion of the sale discussions and the receipt of funds from payment processing intermediaries, the group has deemed it prudent to temporarily freeze withdrawals by United States residents in order to ensure an orderly return of funds to them," the company said.

"The board accepts that this will cause some short-term inconvenience to clients but believes that, in these unique circumstances, it is in the best interests of all stakeholders.

"The board is continuing discussions with a number of unconnected parties who have expressed interest in the acquisition of the group's gaming operations and infrastructure," Betcorp said in a statement to the Australian Stock Exchange.

"There is no certainty that such discussions will lead to a sale, or on what financial terms such a sale might take place," it said.

The company also said it planned to cut its staff by around a third and cease US advertising.

Betcorp stock has fallen 77 percent following news of the ban, mirroring the rest of the sector, which is mostly London-listed and lost about GBP 3.5 billion of market value.

Analysts said interest in Betcorp's business was likely to be limited, with any potential buyer likely to be based overseas.

"If you take away the major market, which is the U.S., obviously anyone who is interested will not be paying a significant price for it," F.W. Holst & Co. analyst David Spry said.

The provider of Internet sports betting and games such as poker has said previously the new law would materially hurt earnings. The company has promised further announcements within the next 10 days.