Soccer losses hurt Centrebet bottom line
Sydney Morning Herald
Tuesday August 25, 2009
A COMBINATION of an unusual string of wins by top European soccer teams and higher betting and marketing costs have triggered a 36 per cent fall in full-year profit for the corporate bookmaker Centrebet International.Many of the increased costs were linked to the company's long-term plan to shift its focus from online bets on sports to horseracing and were triggered by the deregulation of the wagering market.The move to steal a share of the much-larger horseracing market from rivals including the gambling giant Tabcorp has meant it has had to spend 50 per cent more on marketing. Other costs include newly introduced product fees which are paid to racing authorities in NSW and Victoria.Had the company not boosted its spending on marketing and betting costs, it would have posted profit growth of 9 per cent. Instead the net profit was $8.3 million, down 15 per cent from last year.The company also attributed the less-than-stellar result to an unusually long string of wins by top European soccer teams including those in the English, Italian and Spanish leagues."They normally win three matches and draw or lose the fourth match, and essentially because of their favouritism it levels the betting," its chief executive, Con Kafataris, told BusinessDay."But in this case they won a fair few on the trot over and above the theoretical [win rate]."This hit the earnings from online sports betting because bets on soccer contribute 40 per cent of total sports revenues of $28.4 million.The higher betting costs associated with the push into horseracing dragged the profit margin of the overall business down from 28 per cent in 2007-08 to 18 per cent last year..In the past year the value of Centrebet's revenues from online bets on horseracing grew to $16.8 million.However, sports betting still makes up nearly half of the company's total online revenues. Sports betting revenues in the past year were flat at $28.4 million, of which half came from Australian gamblers and half from Europeans.The company has 16 per cent of the online sports betting market but only 1 per cent of the market in bets on horse races. As well as providing online betting, the company offers European gamblers online casino games such as poker, baccarat, blackjack and roulette. The site is not accessible to Australian gamblers, due to laws blocking their access.
© 2009 Sydney Morning Herald