Online gambling company Sportingbet Plc has sold the U.S. operations of its Sportsbook.com online casino to existing managers and a group of private investors, Sportsbook.com said on Thursday. REUTERS/File
UK firms flee U.S. gambling with $1 buyouts
10/13/2006 10:37:16 AM
By Pete Harrison
LONDON (Reuters) - Britain's Sportingbet (SBT.L) and Leisure & Gaming (LNG.L) both pulled out of the United States ahead of a ban on Internet gambling on Friday, each selling their U.S. operations to private investors for $1.
Smaller rival World Gaming (WGP.L) meanwhile said it was impossible to continue in business and called in administrators.
All three companies were rushing to complete the deals before President George W. Bush signed a bill to prohibit Internet gambling into law on Friday.
Sector leader PartyGaming (PRTY.L) and 888 (888.L) have already announced their exits from the United States.
"We are saddened to have to dispose of such a fantastic business as a result of political actions in the U.S. Congress," Sportingbet Chief Executive designate Andy McIver said on Friday.
Sportingbet said it received $1 for the U.S. operations and had discharged liabilities of $13.2 million and avoided closure costs of $14 million.
Leisure & Gaming Chief Executive Alistair Assheton led a management buyout of his group's U.S. operations for $1, rather than close them down and fire 300 staff.
The exit from the United States comes after Republican legislators delivered a heavy blow to Internet gambling this month when Congress unexpectedly approved a bill to enforce prohibition of online gaming.
$7 BILLION HIT
Sportingbet's volatile shares rose by 5 percent in early trading before falling 12 percent to 57 pence by 1406 GMT, valuing the group at almost 240 million pounds ($447 million) -- less than a sixth of its value of 1.6 billion pounds in July before the start of the U.S. clampdown on Internet gaming.
"The exit was
a necessary measure," said analyst Matthew Gerard at Investec Securities. "The continuing business will focus on sports, casino and poker in Europe and Australia."
Since the bill was passed at the start of this month, more than $7 billion has been wiped off the market value of Britain's online gaming companies.
The industry is now splitting between London-listed companies which are pulling out of the United States, and privately owned businesses that are prepared to take illegal U.S. bets offshore.
World Gaming said in a statement, "Directors of World Gaming announce ... they are unable to continue the company's U.S.-facing operations should the Unlawful Internet Gambling Enforcement Act be signed by the U.S. President."
"Administration will achieve a better result for the company's creditors than would be likely if the company were to be wound up," it added.
Leisure & Gaming's Assheton told Reuters: "Leisure & Gaming simply could not keep the U.S. business going, but it'll be just fine with its Italian business."
"The company saves about $6 million in shutdown costs, and we wanted to protect about 300 jobs in the U.S. operation," he said.
Sportingbet's U.S. operation, Sportsbook.com, was sold to Jazette Enterprises Ltd and will now operate as a private company with offices in Dublin, Antigua, Vancouver and Costa Rica.
Sportingbet will retain its Paradise Poker business, but will stop accepting U.S. money later on Friday.
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