Online sports betting company Marginbet Ltd has had a...

Online sports betting company Marginbet Ltd has had a disappointing debut on the Australian stock market.

Shares in the Australian Capital Territory-registered company closed three cents, or 15 per cent lower, on the 20-cents-a-share offer price, at 17 cents.

Marginbet's $2 million initial public offer (IPO) was marketed exclusively to members of the recently established investment services website, Prospectus.com.au.

Based on its closing share price, Marginbet has a market capitalisation of about $8.72 million and compares with its pro forma market capitalisation of $10.3 million, based on the offer price of 20 cents per share.

Through its wholly owned subsidiary Portlandbet Pty Ltd, Marginbet operates an international fixed-odds, internet and telephone sports and horse racing bookmaking business.

Marginbet was licensed by the ACT Racing and Gaming Commission to start taking bets in August last year, while Portlandbet began business in January 2005.

Chief executive Stephen Hobbs said there were significant opportunities for growth in the internet gambling market, particularly internationally.

"In the coming year, we plan to introduce a new sports betting medium known as spread betting or index betting," Mr Hobbs said.

"This type of betting is very popular in the UK and Europe."

Marginbet played down Wednesday the effect of equine influenza on its business, saying horse racing turnover comprised less than 2.5 per cent of Portlandbet's total betting turnover in the first eight months of 2007.

"... in light of the fact that it now seems that horse racing meetings will continue to be held in most areas of Australia, the current restrictions are not expected to materially limit ... growth or the 2007/08 net profit after tax of Marginbet Ltd," the company said in a statement.

"Portlandbet does have plans to grow the horse racing area of its business and it is possible that the potential for growth may be affected by current and future racing restrictions."

Director David Gray said Marginbet was not yet profitable.

He said sports betting is not as popular in Australia as it is in the UK, largely because the resources boom had tended to overshadow any other sector in the local market.

"The model is highly contingent on throughput, or volume, or gross gambling turnover as it is also called," Mr Gray said.

"Now the business has its funding, we're seeking to grow the active clients and start achieving the theoretical win ratio that sports betting businesses bank on."

He said sports wagering had a theoretical win ratio of four to six per cent, compared to 1.8 to two per cent for casinos and about 5.5 per cent for Centrebet, while ever popular lottery games had the worst theoretical win ratio.