Bet on Sports has entered into a multi-million dollar deal to purchase Asian online sportsbooks Hooball and 777ball, thereby firmly increasing Bet on Sports’ presence in the Asian online gaming market.

According to the agreement, Bet on Sports will pay an initial purchase price of US$22 million, which will be satisfied upon completion of the acquisition through US$10 million in cash and the issue of 3,859,089 ordinary shares of 1p each in the capital of BoS. An agreement was also reached for the deferred consideration of up to US$16 million to be paid in cash, depending on how profitable the business is in the year following the completion. The maximum total purchase consideration for the business is US$38 million.

The customer base for the sportsbooks, which concentrate mostly on football and basketball, comes primarily from the Guangdong and Zheziang provinces in Beijing and Shanghai. The existing Easy Bets infrastructure in Malaysia will handle the two new acquisitions once they are fully integrated into the Easy Bets operating structure. Easy Bets’, Malaysian-based infrastructure promises to deliver enhanced management control, cost savings, improved processing channels, additional key personnel skills and product diversification across all of the groups Asian brands.

A company spokesperson, whom confirmed that the acquisitions are in profit, revealed that the profit before tax to 31 December 2005 was US$3.6 million. The current rate of gross handle is approximately $120 million per annum, with respect to two sportsbook brands and including exchange betting of eight million dollars per annum. There is also a new casino, which began operations in March 2006, with an initial gross handle of five million dollars in that month.

During the 15 months ending March 31, 2006 the business saw 28,274 new sign-ups, of which 40 percent were real money sign-ups with deposits. Active clients between January 2005 and March 2006 were relatively stable, remaining at 6,5000 a month.

Tim Lambe, Managing Director of Easy Bets, agreed to extend the earn-out period from three to five years (upon acquisition of Easy Bets in 2005) because the new acquisitions are to be integrated into the existing Easy Bets operation. Adjustments have also been made to the cost base and percentage entitlement to profits above a minimum level in year 3 of the earn out, as well as years 4 and 5, so that the cap on total consideration for the Easy Bets acquisition is now US$40 million. The original cap was at US$32.5 million.

BoS CEO David Carruthers said: "This acquisition is not merely earnings enhancing. We see China as a “must-be-in market” and with Hooball and 777ball consolidating our Easy Bets presence, our first mover advantage is significantly increased. The diversification of revenue streams away from the US further mitigates the seasonality of activity in our US facing business”.

Carruthers further added: “These brands meet our criteria of proven profitability, territorial expertise, straightforward IT integration and robust processing channels combined with effective risk management. We strongly anticipate that the benefits of integration with Easy Bets in terms of cross selling, marketing, skill sets and cost savings will rapidly become apparent. Immediately prior to a World Cup doesn’t look like the worst of times to be acquiring such a strongly soccer-centric sportsbook.”

Hooball’s former CEO and Easy Bets’ current Business Development Manager, Max Hsiun, commented: “I am delighted to be part of the BoS Asian plan and teaming up with a quality brand like Easy Bets with its resources and reputation can only be good for the long term future and the successful development of the Hooball business”.

Posted on: June 7, 2006

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