Bloomberg News

Sportingbet’s Turkish Websites Restricted Before Sale

October 24, 2011

(Corrects date of website restrictions in headline and first paragraph in story published on Oct. 21.)

Oct. 21 (Bloomberg) -- Sportingbet Plc’s Turkish websites were restricted by regulators before the company agreed to sell its operations in the country to East Pioneer Corp. for at least 125 million pounds ($197 million).

The U.K. company said in an offer document dated July 1 that online betting operations had been blocked in Turkey in the past and its websites continued to face potential disruptions. Visitors to one site, superbahis.com, in the country are directed to a message from telecommunications regulators. All websites face similar restrictions in Turkey where unauthorized gambling is illegal.

Sportingbet sold the Turkish operations to increase the proportion of revenue from markets where gambling is regulated, according to a statement on Oct. 14. U.K. bookmaker Ladbrokes said Oct. 10 that a proposed merger with Sportingbet was terminated in part because of potential Turkish liabilities.

“It’s wrong to characterize this as a gray area; it’s pretty black and white -- it’s illegal,” said Scott Longley, business editor at Gambling Compliance, a London-based research company. “It would have meant Ladbrokes board members would never be able to go on holiday in Turkey.”

A spokesman for the Telecommunications and Communications Ministry, who declined to be named by policy, said the ministry will continue to search out sites and block them. A 2007 law allows sites that induce gambling to be blocked in the country.

Sale Proceeds

The company’s proceeds from the sale to East Pioneer hinge on the continued operation of the Turkish business because the U.K. bookmaker will be paid from a portion of profits over as long as six years.

Chief Financial Officer Jim Wilkinson said Sportingbet isn’t concerned about potential loss of income from restrictions in Turkey.

“We’re very confident the situation will continue for three more years as it has for the last five,” he said in a telephone interview.

East Pioneer will operate the Turkish sites for GVC Holdings Plc, which in turn pays Sportingbet. A spokesman for GVC, based in the Isle of Man, referred questions to Sportingbet.

In 2008, two Sportingbet employees, Turkish nationals who went to the country on vacation, were arrested. Sportingbet currently has “no established physical presence” in Turkey, according to the offer document.

Sportingbet said its recent transactions, adding companies in Australia and Denmark, will push the portion of its revenue from regulated markets to half, and next year to 70 percent.

Simon Davies, an analyst with Collins Stewart who has a “buy” rating, said the Turkey deal will make it more appealing to potential acquirers such as OPAP SA or Betfair Group Plc.

--With assistance from Benjamin Harvey in Istanbul. Editors: Peter Branton, James Kraus

To contact the reporter on this story: David Altaner in London at daltaner@bloomberg.net

To contact the editor responsible for this story: Colin Keatinge in London at Ckeatinge@bloomberg.net


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