March 6, 2013 7:28 pm

Sportech bets on tie-ups for US growth

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Sportech has staked its future firmly on the US market, saying it is ready to take advantage of changing gambling regulation in North America, but acknowledged it needed to offer other products such as casino and poker.

The opening of the US online gambling market speeded up last month when New Jersey joined Nevada and Delaware to pass a law to regulate internet betting.

Sportech, the operator of the football pools in the UK, used its preliminary results to stress the inroads it has already made into the US, where it provides pool betting in racetracks.

Sportech revealed it had four offices and 700 staff in the US, where it offers under licence pool betting systems to 100 racecourses and betting shops across 26 states.

“We are well positioned for regulatory developments, either at the federal level or on a state-by-state basis,” the company said.

The group added a provider of internet and mobile betting services for US horseracing when it bought eBet Online in December for $12.6m, the same month it won a licence from Connecticut to offer online bets.

It is expected to begin online horseracing bets in Connecticut in the next few months.

Ian Penrose, chief executive, said: “Twenty-six states know who we are, we have people on the ground who operate with them. We think it’s an important factor.”

Sportech lacks casino and poker products, the activities that will be in the forefront of online gambling as states look to regulation, and Mr Penrose said the group was eyeing acquisitions or commercial partnerships to fill this gap.

Twenty-six states know who we are, we have people on the ground who operate with them. We think it’s an important factor

- Ian Penrose, chief executive, Sportech

“We have got to make sure we position ourselves so that [US regulation] doesn’t pass us by,” he said.

“We have a very big presence in the racing industry. We need to layer over other products to enhance our gaming presence.”

Full-year revenues were down 5 per cent to £112m, the result of ending unprofitable campaigns to acquire customers.

Earnings before interest, tax, depreciation and amortisation rose 1 per cent to £26.4m and pre-tax profit after exceptionals and refinancing was £2.1m, down from £8m the previous year.

Ebitda from US operations rose more than 19 per cent. The pools business made ebitda of £20m, similar to last year, and the number of football pools customers has stabilised at a little less than 400,000.

The group is also gearing up for a tribunal decision on a VAT repayment claim, which it said should be made shortly.

Simon French, analyst with Panmure Gordon, said upcoming events should improve earnings, while its position in the changing US market left Sportech “exceptionally well positioned to capitalise on this more permissive approach.”

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