ondon-based SportingBet acquired SportingBet Italia in May of 2006 in anticipation of further expected liberalisation in the Italian online gaming market. It revealed that it had expected these new measures to include an increase in the maximum payout from 10,000 euros, relaxation of the stipulation to use specific software and the provision of in-running betting. However, these changes did not materialise with the Italian government creating a new offline model instead and tendering over 13,500 shop-based licenses.
“Consequently, the combination of this new alternative channel for the Italian customer together with the lack of operational synergies with the rest of the group’s European business has meant SportingBet Italia has been loss making since acquisition,” read a statement from SportingBet.
“While these losses have been reduced to the minimum considered achievable, the board has concluded that significant financial and managerial investment would be required to generate a profitable business in Italy from its current base and, at this present time, such investment would be better placed elsewhere in the group’s portfolio.”
SportingBet revealed that SportingBet Italia had generated amounts wagered of us$ 23 million for the first eleven months of its current financial year alongside us$ 3.3 million in net gaming revenues. This saw the unit post an operational loss of approximately us$ 2.5 million for the period with the disposal likely to result in an exceptional cost of us$ 11.9 million comprising a write-down of goodwill of us$ 10.7 million and a loss on disposal and other associated costs of us$ 1.1 million.
SportingBet stated that the disposal would see its cash balance reduced by us$ 2.6 million although it has reported a ‘positive start’ to its fourth quarter and ‘remains confident of achieving full-year forecasts and of the prospects for the group going forward’.