888.com Increases Profits Despite UIGEA

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34 percent lift in pre-tax profits from Gibraltar-based group

The Gibraltar-based 888.com gambling group has shown investors just how resilient it is with a set of results that includes a 34 percent increase in year pre tax profit and first-quarter revenues that are 16 percent ahead of the preceding quarter. And all despite the depredations of last year's Unlawful Internet Gambling Enforcement Act which caused the group to exit the US market.

Profit before tax was $90.5 million (GBP 45.4 million) in year 2006, compared with $67.4 million a year earlier, and the company reports overcoming a 55 percent drop in revenues after the US banned internet gambling late last year to post full year pre-tax profits up by more than a third.  Net gaming revenues for the period rose 7 percent to $289.9 million.

However, it is thought that a potential deal to sell 888.com to betting group Ladbrokes was halted due to complications over the US law change, with Ladbrokes said to be looking at ways to cap any liability in the US which could arise from a takeover of 888 as America continues its online gaming crackdown.

The two firms said last week they were no longer in talks, but remained tight-lipped over the nature of the deal, saying only that they had been in discussions about “a business transaction”.

888.com CEO Gigi Levy said that after his company ended talks with Ladbrokes last week its focus was now on being a predator rather than prey. "We don't look at ourselves as anybody's lunch," he told Reuters. "With that very fast Q1 growth we should be growing ourselves and acquiring other companies."

"We're looking at a number of things," he added. "It's probably going to be where our core business is, which today is the UK and Europe."

Levy said he saw huge growth opportunities for the online bingo business that 888 bought from Globalcom for up to $43 million last month. "Bingo is a late bloomer in online gaming," he said. "This is predominantly women and a whole different segment that most online gaming companies do not address."

"Bingo is huge in central Europe and Latin America. There's huge growth opportunity that nobody's tapped yet - Bingo will not stay in the UK."

Asked whether expansion into Spain was on the agenda, Levy said: "That's one of the first places we're looking at.

On this morning's (Monday) share prices 888.com is currently valued at GBP 423 million.