The US passed a law earlier this month which will make internet
gambling illegal. Many industry observers doubted that the Act
would make it through the Senate since similar legislation had
failed a number of times, but it was attached to an unrelated ports
bill which was passed by the Senate. It will become law when signed
by the US President.
"Since the passing of the Unlawful Internet Gambling Enforcement
Act of 2006 (the “Act”) by US Congress on 29 September 2006, the
Board and its advisors have undertaken a comprehensive legal and
strategic review with regard to the Group’s US operations," said a
Sportingbet statement. "The advice received was consistent in
substance and concluded that Sportingbet should not continue to
provide gaming services to US based residents."
"Having considered the legal advice received and the options
available, the Board concluded that a disposal of the Group’s
US-facing sports betting and casino operations together with the
closure of its US poker operations was in the best interest of all
stakeholders," said the statement.
Jazette Enterprises Ltd has bought the US business. It has paid
a dollar and took on liabilities of $13.2m as well as
responsibility for the company's 500 US staff. Jazette told
Sportingbet that it would keep the operational structure of the
business in place.
Sportingbet estimates that the cost of closing the US business
and paying severance packages would be $14m, and that the combined
savings of those costs plus disposed-of liabilities amount to
$27.2m.
The sale will only proceed if the Act becomes law. If the US
President does not sign the Act into law the business will revert
to Sportingbet and a fee of $500,000 will be paid to Jazette.
“We are saddened to have to dispose of such a fantastic business
as a result of political actions in the US Congress. The sale
however, prevents significant closure costs which would have been
both expensive and time consuming," said Andrew McIver, Chief
Executive designate, said of Sportingbet.
"It also preserves the employment of those of our colleagues who
have worked so hard to build the US operations into the highly
profitable business it is today. Sportingbet will now focus on
developing its business in other key markets of the world," said
McIver.
Under the terms of the deal Jazette will not take bets from
outside the US for two years and from outside of the Americas for
three years, according to Sportingbet. It said that Jazette will
not use the urls it has bought – wallstreet.com, aces.com and
sportingbetUSA.com – for US gaming purposes.
