Unibet Sees Fall in Profit: Ends Cycling Deal

Swedish gambling company Unibet Group Plc. has described the second quarter of 2007 as an ‘Unsatisfactory Quarter’ as it announced its results for the period.

Gross winnings at the online gaming operator fell by 10.5% versus the same period last year to £16.5 million, generating a profit before tax of £1.6 million, down 70% from Q2 2006.

"This has been the punters' quarter,” said Petter Nylander, CEO of Unibet. “The poker competition has continued in primarily Sweden, Norway and Denmark. Additional costs ... together with the demanding political/legal situation have had an impact on the business."

Unibet’s sports book margin in the second quarter was substantially lower than average as a result of a large number of favourites winning in the major football leagues, ice hockey and tennis tournaments.

"The lower result for the quarter is a consequence of substantial lower gross winnings and an increase in operating expenses, partly being one-off costs for the quarter. In Sweden especially, the competition has continued after the introduction of online poker offering by the monopoly. Our expectation is that this situation will stabilise during second half of 2007.” Said Petter Nylander.

Commenting on the company’s legal difficulties, he added "During the second quarter the EU Commission has clearly stated that the monopoly situation in two key countries Sweden and France is a breach of the fundamental principles of European law. Despite increased activity from the EU Commission, short-term the resistance remains on a national level. Amongst other things this has adversely affected the Unibet sponsored cycling team, Unibet.com, from being denied to participate in the Tour de France during the second quarter. Even if the difficulties in France continue, our view is that the French and the European gaming market will inevitably be de-monopolized."

The company also announced Wednesday it will be leaving the world of cycling. After a season filled with legal problems, the sponsor decided to end its activities in the sport at the end of this year.

Earlier this year, Unibet.com was positive about participation in the three grand tours. This optimism was re-inforced when the team was given a ProTour license by the UCI.

However, the sponsor was not allowed in races in Spain and France, where the law points out that foreign gambling companies are not allowed to advertise.