SportingBet - Compelling valuation within the Gaming sector
Recent newsflow: Spain, the US, and Australia Spain – licence issued, back tax paid, Miapuesta.es open for business Spain has dominated recent newsflow with Sportingbet and other operators being awarded eGaming licences on 1 June, some months late. This is excellent news since it means that Miapuesta.es is up and running in time for Euro 2012. Sportingbet has historically held a top three position in Spain but was forced to suspend its Miapuesta.com website on 27 March due to an injunction by offline gaming giant Codere. The granting of the licence on 1 June negated part of the injunction and Sportingbet has applied to the court to have the remaining part of it cancelled, hopefully shortly. Spain normally generates about £20m of net gaming revenue (NGR) after tax, so Sportingbet lost about £2m of profit for the two-month closure.
More unhelpfully, it will have lost customers to rival sites and we have assumed that it will cost at least £2m to launch Miapuesta.es with bonus-ing and other marketing initiatives. With major industry players such as bwin.party digital entertainment and Bet365 also active, we expect Spain to be a highly competitive market. However, the Miapuesta brand is strong and, despite economic pressures, our FY13 estimate assumes a return to at least 70% of the FY11 revenue level. Sportingbet has paid Spanish gambling tax (25% of gross win, or roughly £8m a year) since May 2012. However, in May 2012 the Spanish government unexpectedly demanded payment of back-taxes (having dredged up two old laws, from 1966 and 1977, that had not previously been applied to offshore online gaming). The tax cost Sportingbet €17.2m (£13.8m) including interest, which it funded by issuing an additional £15m of 7% convertible bonds (as the cash was required at very short notice).
July 2012 | www.financial-spread-betting.com | 33