Sportech issues warning after sales failure
Sportech has seen its share price plummet by around 15% today after its failure to secure international sales led to a profits warning.
The company said that adjusted EBITDA, excluding sports betting investments, for 2018 will likely be 5% to 10% lower than the current market expectation of £8.5m (€9.9m/$11.1m). While “disappointed”, Sportech said the latest forecast would still represent year-on-year Adjusted EBITDA growth of between 14% to 20%.
The firm sold The Football Pools for £83m last year and has stated that its focus will be on US expansion following the repeal of PASPA in May. It also agreed to sell its Sportech Racing business, which has a five-year licence for the exclusive rights to carry out tote betting on horseracing in the Netherlands, to RBP Luxembourg for €3.25m earlier this year.
It is particularly focused on Connecticut, a state where it owns 16 Winners and Bobby V’s locations, and which is likely to legalise sports betting next year.
CEO Andrew Gaughan (pictured) said in a statement: "Whilst we are disappointed not to have secured some international sales contracts by the year end, we continue to focus on signing these contracts.
“We are working proactively with Connecticut and other states in the US to secure the rights to conduct sports betting as a licensed operator and we expect that sports betting revenues will commence in the second half of 2019."
Sportech Venues operates all betting on horse racing, greyhound racing and jai alai in Connecticut under an exclusive licence for retail, telephone and online. The company said today that it "continues to work proactively with existing B2B clients across the US and with the state of Connecticut to extend the group's existing pari-mutuel licence to conduct sports betting as a licensed 'direct to consumer' operator".
In August it said it has been “working diligently to create our unique integrated solution for both the consumer market in Connecticut and to be delivered as a B2B offering for our racing customers across the 36 other US states where we have a B2B presence”.
In August, while releasing its interim results for the six months to the end of June 2018, the company said: “We believe that Connecticut will be an adopter of a comprehensive legal and regulatory framework for sports betting, either in a Fall special session or in H1 2019.
“We believe that we will have a strong direct-to-consumer sports betting offering in Connecticut and that our 16 current (24 potential) Venues and our online / mobile betting service form an ideal base from which to offer sports betting within the state, alongside the two Tribal Casinos.
“We continue to be a proactive supporter of legislation to regulate sports betting and combat illegal Advanced Deposit Wagering 'ADW' operators within the state to reduce the spread of illegal activity and protect consumers.”
Sportech also issued a profits warning in March while also announcing its failure to find a buyer and the appointment of Gaughan as CEO.