reuters.com
LONDON (Reuters) - Online gaming firm BETonSPORTS (BSS.L: Quote,
Profile, Research) is Costa Rica-based, London-listed and does most of
its business in the United States, so why has Scottish Chief Executive
David Carruthers just taken his third lesson in Mandarin?
The answer -- he expects explosive growth from the group's recent
acquisition of Easybets, a company that investors are watching keenly
for clues to the burgeoning Asian online gaming market.
Easybets takes about 80 percent of its business from China and Hong Kong.
"We see seeds of development comparable to Central America and the
Caribbean five years ago," Carruthers told Reuters late on Monday.
"It's about to explode."
High fraud levels, payment processing hassles, and low penetration of
broadband and credit cards are cited as problems for Internet gaming
companies in Asia, but Carruthers says he has seen little of this.
"We have a huge headstart because of what we bought with Easybets," he
added. "The soft target is organic growth, but I wouldn't discount
acquisitions. This market will make the U.S. look like chicken-feed in
five years."
BRITAIN TOO CROWDED
Carruthers said the three U.S.-focused online sportsbooks and casinos
it bought in December for up to $37 million were being integrated
smoothly. They are MVPSportsbook, Player Super Book and V-Wager.
And he said the group was keen to balance out its Asia- and U.S.-focused business, possibly through further acquisitions.
"The likely strategy to enter Europe would be an acquisition, but we're
not going to play in the UK -- It's too crowded," he said. "Why spend
money competing with the likes of William Hill (WMH.L: Quote, Profile,
Research) and Ladbrokes (HG.L: Quote, Profile, Research)?"
He said prices for acquisitions became unrealistic and inflated after a
wave of enthusiasm for online gaming last summer when PartyGaming
(PRTY.L: Quote, Profile, Research) and 888 (888.L: Quote, Profile,
Research) floated, but they have since moderated.
"People have seen PartyGaming slip up a bit and then recover, and now prices are a bit more realistic."
And while there are around 2,000 online gaming companies worldwide now,
he expected that to consolidate to around 20 in the next five years.
"We're going to start seeing public companies going after public companies soon," he added.
When it announced its U.S. acquisition in December, BETonSPORTS warned
that NFL sports betting margins in the United States had recently been
hit by a large number of favorites winning.
Bookmakers' margins suffer when favorites keep winning.
"We said that if NFL margins returned to historical levels, we'd be
okay," said Carruthers. "Well, we're now four weeks on and we haven't
said anything further, so you can draw your own conclusions from that."
"The number six seed is in the final, and that's an indication the ups and downs of results have normalized," he added.
