SHARES in online betting company
Betcorp appear to have stabilised after a profit slump slashed more than
20 per cent off the stock price last week.
Moving to regain investor confidence, the company released an
explanation yesterday for a drop in earnings for the three months to
March 31 – a net loss of $1.9 million versus a profit of $6.1 million
for same period last year. Chief executive Richard Barker said he was
confident new risk management procedures would prevent a re-run. "The
first-quarter loss is very disappointing but we’ve rooted out the
problem and now expect to revert to normal win ratios," he said.
shares closed up 1.5c to 45c. The slide in earnings was traced back to
three weeks in February when US betting syndicates used Betcorp
established agents in Asia to get better odds and limits. About 80 per
cent of Betcorp’s Antigua-based Worldwide Telesports business is through
recreational punters. It restricts professional, high-end bets (as
placed by the US syndicates but masked when delivered by Asian agents)
to minimise risk. As a result of the back-door activity, US basketball
started to return losses, with NBA basketball recording a gross win
margin of 0.6 per cent compared with a hold of 4.4 per cent in 2003.
Betcorp has since curbed betting limits on Asian agents on average by 70
per cent and achieved earnings before interest, tax depreciation and
amortisation in March.