Reuters: Sportingbet, 888 Must Settle With U.S. Justice Department

Written by:
C Costigan
Published on:
Aug/19/2010

Matt Scuffham of Reuters on Thursday writes that the powerful online gambling firms of Sportingbet and 888, both publicly traded on the London Stock Exchange, must settle with U.S. law enforcement if they wish to enter the lucrative Stateside market should legislation pass this year allowing for Internet poker.

"The DoJ/U.S. issue needs to be resolved prior to anything happening," a source close to one of the companies told Reuters.

Such a resolution would clear the way for the companies to re-enter the lucrative U.S. market assuming moves to overturn the 2006 legislation succeed.  This essentially will make both online gambling firms more attractive to buyers.

Merger talks between PartyGaming and bwin only began after Party had agreed a $105 million settlement.

On Thursday, bwin’s CEO said that, should legislation not pass, his company’s move out of the U.S. in 2006 would have been the “biggest mistake ever”.

Norbert Teufelberger pointed to PokerStars and Full Tilt Poker, which he says continue to operate in the U.S. illegally, but they have benefitted in huge ways since 2006.

“We pulled out, they didn’t. But we’ll see who was right in the end. We still believe we were correct and it’s pretty clear cut,” he tells eGaming Review.

Sportingbet is certainly a lucrative brand on the sports betting side.

KBC Peel Hunt's Nick Batram said its position in Australia, where it is the country's biggest bookmaker, would be of interest to traditional operators Ladbrokes (LAD.L) and William Hill (WMH.L), as well as to the combined Party/bwin entity.
"There are a lot of people out there who would like to buy Sportingbet. The value in that business is in its very strong market position in Australia. Bwin isn't in Australia to any degree, while Ladbrokes and William Hill are not sizeable in Australia," he said.
Liberum Capital analyst Richard Taylor agreed that Sportingbet was the "most attractive M&A play" in the sector.

Sportingbet shares have dropped by 10 percent since the start of the year, reflecting frustration it has yet to agree a U.S. settlement.  888 shares, meanwhile, have lost nearly two-thirds of their value.

Aaron Goldstein, Gambling911.com

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