Sportingbets profits soar as punters flock to virtual tables - Sunday 16th of October 2005

Sportingbet, the online gambling group that owns Paradise Poker, announced a dramatic increase in annual profits yesterday and said its online poker business had a record September as punters continued to flock to its virtual tables.

The news helped lift some of the gloom that has fallen over online poker in the past few weeks but raised questions about the performance of PartyGaming, the market leader that warned last month growth had virtually ground to a halt. "Sportingbet sees no sign of poker slowing and for us it continues to grow strongly," said finance chief Andrew McIver.

The online group announced pre-tax profits for the year to the end of July of £41m, up from £5.4m last year. The company makes a third of its profits from sports gambling, a third from online casinos and the rest from poker. Poker enjoyed the best rate of profits growth in the year after Sportingbet bought Paradise Poker in November for an initial £169m. The number of games played daily on Paradise Poker has grown to 1m from 600,000 in the previous year.

Since the end of the financial year, Sportingbets poker business has continued to steam ahead. Between January and July the number of poker games increased 27%, while in September the number of games leapt 32% compared with July. "Growth actually accelerated, our own growth has accelerated," said Mr McIver.

News that players are still being attracted to online poker helped shares across the industry, with PartyGaming, which owns the Party Poker site, up 7p at 78.5p making it the biggest riser in the FTSE 100, and Empire Online up 9p at 111p. Both stocks have suffered dramatic falls recently, PartyGaming after its profits warning and Empire Online after its larger rival severed ties with the site. Sportingbet had been in talks to buy Empire Online two months ago but called them off after just a few weeks.

Sportingbet announced plans for a maiden 1p dividend but with £67m in the bank and borrowing facilities that could provide more cash, Mr McIver said "we certainly have some substantial firepower" for deals. "We can either give the cash to shareholders or we can continue to acquire businesses. If we can find businesses at the right price, which are not earnings dilutive and do something strategic for the business we will acquire them."

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