Issue N8, 2007

March 1, 2007

Online Bingo Company Reports on Substantial Losses

The operator of one of the biggest online casino companies in the world, Bingo.com announced its financial results for the final quarter of 2006, showing unfortunate figures due, mainly, to the new anti-gambling laws passed in the United States. When the Unlawful Internet Gambling Enforcement Act came into being last year, Bingo.com had no choice but to sell its U.S. gaming sector to a third party and immediately halt its American operations. This obviously had a huge impact on the company’s financial performance and the results can be seen in the latest report.

Among one of the most striking losses was reflected in the company’s figures regarding total revenue in the final quarter of 2006, in comparison to the previous quarter of that same year. Bingo.com achieved total revenue of $103,630 – a decrease of a whopping $727,114 from the third quarter of 2006. Due to these poor figures, the company is accelerating its efforts to break into the international market and plans to open a U.K. based bingo site by March 2007. The company intends to open up other sites later in the year but will ensure that all business transactions take place in regulated countries only.

Chinese on Three-Month Internet Gambling Clampdown

Chinese authorities, worried about the increased use of the internet for gambling purposes by its young citizens, has launched a campaign to crack down on internet wagering. The authorities have already published results on some their successes, which include the fact that they have managed to bust 347,000 cases of gambling involving 1 million people in recent months. The Chinese Central Government launched a similar campaign against pornography and pimping recently and had reasonable success in curbing these activities.

The number of people addicted to the internet is steadily increasing in China, especially among the young. Out of the country’s 20 million under-18 internet users, 13% of them are classified as addicts. From this number, many are addicted to online gambling and spend a total of millions of dollars each month. While the Chinese government does not allow online or regular gambling within its borders, it has made an exception with the tiny enclave of Macau – a Chinese territory bordering Hong Kong. Macau recently surpassed Las Vegas as the world’s biggest gambling center. The double message that the country’s inhabitants are getting from the Chinese government regarding gambling may contribute to the high rise of addicted gamblers online.

Playtech Weathers Post-UIGEA Storm with Good Results

While most countries are licking their wounds and counting their losses nearly six months after the United States passed the UIGEA anti gambling law, Playtech – a publicly trading online gambling company – announced this week that it had nearly doubled its annual pre-tax profit. Compared to numbers at the end of 2005, Playtech reported that pre-tax profits rose from $35.7-million to a great $60.8-million at the end of 2006.

When the UIGEA was passed, Playtech immediately decided to focus on its other entities in Asia and Europe. Its broad casino portfolio meant that the company was able to offset much of the losses entailed by the withdrawal of their licensees in the U.S. in October last year. The company also took other steps to increase its customer base such as introducing new products to lure in new clients. These marketing moves seemed to work as the company’s sales increased dramatically from $47.6 million to $90-million.

Ex-888 CEO Sought by French Authorities

Former 888 CEO, John Andersen, a well-known public figure in the online gambling industry, was summoned by French authorities this week to attend an interview regarding his part in online gambling activities. The French have been leading a clampdown on several online gambling companies in Europe, starting with the arrest of two founders of Bwin, an Austrian gambling company, five months ago. Experts say that the summons for Andersen to appear before French authorities could be due to 888’s official sponsorship of the French soccer team, Toulouse. A recent change in French advertising law banned online gambling companies from promoting their products.

When news of Andersen’s summons started to circulate, an already beleaguered online casino market took another hit. Share prices began to fall on the London Stock Market, with 888 Holding PLC’s shares falling another 6.8%. Other companies also reported share drops. Sporting Bet’s shares dropped 1.7% and Party Gaming dropped a serious 7.5%. 888 tried to play down the effects of Andersen’s summons and said that the French market represented an “immaterial percentage” of its total global business.

The French state-run gambling industry conflicts with European Union laws regarding gambling and has led many to question the legality of the recent spate of arrests of casino heads by French authorities, including Manfred Bodner, Norbert Teufelberger and now, possibly, John Andersen.