Sportingbet Says Rumors of Poker’s Demise are Greatly Exaggerated

Sportingbet plc, one of the internet’s largest online gaming companies, posted a 190% jump in profits this week and made its best efforts to mollify investors’ apprehensions that industry growth rates may be slowing.

While its casino and sportsbook businesses have been doing well, the earnings were due in large part to the firm’s purchase of Paradise Poker last year. Paradise increased operating profit of the overall company 28.4 million sterling. In fact, the poker room grew by 22% over the last ten weeks, which is in line with the same period last year. 37,680 new poker accounts were added during that time.

The poker growth rate seems to fly in the face of a warning PartyGaming, the internet’s largest online poker room, gave on September 6, just a few months after it had gone public. PartyGaming said that growth rates in online poker would be slowing down, causing the share prices of all online poker companies to take a sharp dive. Sportingbet had lost 22% of its value since then, but rose 6% on this week’s good news.

CEO Nigel Payne told reporters, “I can only call it as I see it and right now I can't call a slowdown in any activity.” Adding dig at PartyGaming, he continued, “I think there are a lot of operators out there who are very pleased with the way their poker business continues to progress.”

An interesting contrast between Sportingbet’s upbeat attitude and PartyGaming’s gloomy outlook can be seen in the rival’s new customer acquisition costs. PartyGaming spends 286 USD to sign-on a new player, whereas Sportingbet spends less than half that – 132 USD.

Operating profit rose to 60.5 million sterling from 20.8 million, over 2 million more than the average analyst expectations of 58 million. Revenues increased 30% to 1.5 billion.

Originally published October 13, 2005