have : a look

Betcorp - Disposal of Gaming Operations to Bodog Entertainment for $9m

Betcorp has announced the sale of its entire gaming operation to the privately owned Bodog Entertainment for US$9m (plus the assumption of US$2m current liabilities), payable in five instalments over a year. Bodog will take over Betcorp’s facilities in Antigua and Toronto and use its proprietary multi-currency shared purse operating platform to develop its own brand in Europe and Asia. It will not use any Betcorp urls or brands to provide gaming services to US residents. The transaction requires shareholder approval and is expected to be completed around 15 November. Betcorp has said that it intends to return all funds to shareholders and we would expect it to de-list from AIM (it is de-listing from the ASX on 31 October).

The deal looks a very good one for Betcorp shareholders given the difficult circumstances. UK listed operators have been unanimous in their interpretation of the October 13 Unlawful Internet Gambling Enforcement Act as requiring that they exit US-facing online gambling. Betcorp’s only alternative would have been to close its US operations at a cost of around $6m, which would have left a small and unviable European business. The price reflects the value to Bodog of Betcorp’s non-US operation and infrastructure and represents a very reasonable 2x non-US gross margin. (Hence the deal is not directly comparable to recent disposals by Sportingbet and Leisure & Gaming, who both retained their non-US operations). Overall, we estimate the return of funds to shareholders could be in the region of US40-50c per share (21-27p), although the timing and method of return has not yet been decided.