The beleaguered online gambling industry is bracing itself for a wave of company collapses and redundancies, after World Gaming collapsed into administration today.
It is the first company to crash, following the shock decision of the US senate to outlaw online gaming last month. President George Bush is expected to sign the legislation into force later today.
All the online gambling companies are racing to close or sell their US operations by the time he signs. 888 emerged today as the latest to be looking for a suitor.
Asked if the company would go private, chief executive John Anderson told Dow Jones: “I think that’s got to be looked at.”
He said all options are being considered, including opportunities to expand the business in Europe. Yesterday, Sportingbet sold its US sports betting and casino business for a nominal $1.
The secured creditors of World Gaming, understood to be Barclays Bank, pulled the plug on World Gaming earlier this morning and called in administrators UHY Hacker Young.
The administrator has issued a statement saying: “The secured creditor has subsequently concluded that it is reasonably likely that administration will achieve a better result for the Company’s creditors than would be likely if the Company were to be wound up.”
All the directors have resigned. The company has operations in Antiqua, Vancouver, London but it is not clear how many employees will lose their jobs.
Gibraltar is likely to be particularly hard hit by the US crackdown. One in ten adults of the island works for the online gambling and betting industry.
Sportingbet sells US online gambling business for $1 with casino en ligne
Britain’s Sportingbet Plc has pulled out of the United States ahead of a ban on Internet gambling by selling its U.S. operations to private investors for $1.
“We are saddened to have to dispose of such a fantastic business as a result of political actions in the U.S. Congress,” Sportingbet Chief Executive designate Andy McIver said on Friday.
“Sportingbet received cash consideration of $1 for the shares and related assets of the U.S. operations, and has discharged excess liabilities amounting to approximately $13.2 million,” it said in a statement.
The exit from the United States comes after Republican legislators delivered a heavy blow to Internet gambling this month when Congress unexpectedly approved a bill to enforce prohibition of online gaming.
President George W. Bush is expected to sign the measure into law later on Friday.
Sportingbet’s shares rose by 5 percent to 68-1/2 pence by 0947 GMT, valuing the group at almost 290 million pounds ($540 million) — down considerably on the group’s value of 1.6 billion pounds in July before the U.S. started its clampdown on Internet gaming.
“We think this is a good deal for Sportingbet shareholders, which removes a small level of uncertainty and should help conserve the group’s net cash,” analysts at Numis Securities said.
The analysts said they had stripped out 13.1 million pounds of anticipated profit from Sportingbet’s U.S. operations to give a new group pretax profit forecast of 20.8 million in 2007.
The online gaming industry is now splitting between London-listed companies, which are pulling out of the United States, and privately owned businesses that are prepared to take illegal U.S. bets offshore.
Sportingbet’s U.S. operation, Sportsbook.com, was sold to Jazette Enterprises Ltd and will now operate as a private company with offices in Dublin, Antigua, Vancouver and Costa Rica.
Sportingbet will retain its Paradise Poker business, but will stop accepting U.S. money later on Friday.
“Had the business been closed, the board estimated that the cost of severance and closure would have amounted to approximately $14 million — a total saving of circa $27.2 million,” it added.