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Posted by: ian_go at August 14, 2006, 9:18 am

Topic: Betcorp hangs up on American punters Forum: Winner Online

Betcorp, the AIM-listed online gaming company, has stopped taking telephone bets from American residents, and is reviewing its US-facing businesses in the wake of the racketeering and corruption allegations that have beseiged its sector rival BetOnSports.

The US business accounts for up to 85 per cent of the total and telephone bets 9 per cent of revenues.

Colin Walker, the chief executive, told Times Online that Betcorp continues to monitor its American-facing businesses in the light of continued uncertainty about the legality of online gaming.

"We're registered in Antigua, where we take bets. The iew we'd understood from our legal advisers was that we had been acting legally and appropriately. Recent events have cast that into doubt," Mr Walker said.

Betcorp shares lost more than 40 per cent of their alue following the arrest in Texas last month of BetOnSports chief executive David Carruthers, said it was taking steps to minimise the legal risks associated with the American market "to the maximum extent practical".

The company's US-facing businesses account for between 80 and 85 per cent of its revenues.

Mr Walker maintained that the company was highly cash generative and would expand geographically outside the US. He said the focus would be on markets in Europe.

He also said that trading in the wake of Mr Carruthers' arrest, a period not covered by the company's interim results published today, had remained strong. "Trading has been ery good. It's a big marketplace. We feel it has been ery positive across all areas," Mr Walker said.

Sentiment over online gaming was thrown into turmoil last month following the arrest of Mr Carruthers by the American authorities. He igorously denies any wrongdoing but was subsequently sacked by the company.

He is expected to apply for bail at a hearing today.

At the end of last week, BetOnSports said it would be shutting down all of its US-facing businesses with the loss of some 800 jobs. More than 80 per cent of its revenues were generated in the US markets.

Online gamers have been struck by doubts over the legality of online gambling in the US, where internet sports betting has been deemed illegal amid moves to outlaw other gaming practices.

No longer taking bets from US customers will have "an adverse effect on sports betting turnover but will partially offset by personnal and telecommunication cost reductions and the migration of telephone activity to the internet", Betcorp said.

The company maintained that just "a handful" of jobs will have been lost as a result of ending telephone betting in the US. "We anticipate that the overall effect on profitability will not be material," Betcorp added.

Disclosure of the move to end US telephone bets came as Betcorp reported a 146 per cent jump in pre-tax profits to $4.6 million during the six months to the beginning of July, a period prior to the apparent crackdown on online gaming by the US authorities.

Betcorp said total gross revenues from players rose 75 per cent to $22 million and active customers increased by a third during the period to 27,281.

source : http://www.timesonline.co.uk/

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