Lack of debt and a strong cashflow have left the online gaming industry ripe
for consolidation, the administrators of e-betting company
World Gaming said this week.
The industry is facing a period of upheaval following US moves to clamp down
on online gambling.
But despite fears that the collapse of
World Gaming could be followed by
others in the sector, Andrew Andronikou, of UHY Hacker Young, said it was an
‘We’re going to see consolidation in the industry over the next few weeks,’
predicted Andronikou as Sportingbet and Leisure & Gaming both sold their US
operations for a token $1 on Friday. ‘Competitors are shutting down their US
operations and concentrating on the European market.
‘I’ve spoken to most of them and Europe is still an attractive investment
because of the industry’s low overheads. Most online gaming companies are
effectively debt-free cash cows. The difference with World Gaming was that it
had debts which were funding expansion.’
Andronikou is overseeing the administration of World Gaming alongside Peter
‘At the moment, we are looking at the intellectual property rights in the
software and infrastructure of the business,’ Andronikou added, ‘but I don’t
think there’d be many others that would be looking for administration as a
haven. If there were going to be it would have happened by now.’
At one point World Gaming’s share price slumped by 88% because of its
reliance on its US operation. Its shares were finally suspended at 4p.
The US represented an overwhelming proportion of the company’s activities via
its sites sportingbetusa.com, sportsbetting.com, betonusa.com and
sportsbook.com, which it touted as ‘some of the largest and most profitable
e-gaming sites in the industry’.
At board-level, the fallout has been severe as the US crackdown sparked a
In the last few weeks a domino effect has seen an increasing number of
companies throwing in the towel before President Bush signed into law the
Unlawful Internet Gambling Enforcement Act. The legislation makes it an offence
for companies to accept or handle money obtained from online gaming in the US.
As President Bush prepared to sign the Act, World Gaming’s CFO David Naismith
stepped down, as did chief executive Daniel Moran, sales and marketing director
Jonathan Moss and non-executive director Michael Cumming.
World Gaming announced: ‘Following the suspension of trading, the directors
of World Gaming have now determined that they are unable to continue the
company’s US-facing operations.
‘This decision follows discussions with all key parties and after receiving
appropriate legal advice. These operations contributed the overwhelming majority
of the company’s revenues for the year to date 2006.
‘The board has consequently notified its secured creditor of the
discontinuation of its US-facing operations conditional upon signing of the
Compass Group has settled legal disputes involving UN contracts. The problems
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Services subsidiary in bidding for contracts, a matter that had been
investigated by Ernst & Young and law firm Freshfields. Compass paid out
nearly £40m to avoid a court wrangle that could have seen it liable for £600m in
Compass said that a final settlement of all claims against all
Compass-related parties had been agreed. The company admitted no legal
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an ‘extensive search’ for Reed’s successor. ‘It is a very significant role. We
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