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http://uk.biz.yahoo.com/041124/214/f79nb.html
Wednesday November 24, 01:30 PM
Advertising cuts bash BETonSPORTS
LONDON (ShareCast) – BETonSPORTS (LSE: BSS.L – news) shares crashed by more than 50% as the online gambling group issued a shock profit warning today.
The group said radio stations had cancelled around $10m-worth of advertising campaigns during the busy American football season after a government clampdown on gambling in the US.
The majority of Costa Rica-based BETonSPORTS income originates in the US where running a betting book is against the law, but gambling is allowed. The US government is urging the media, and radio in particular, to stop playing gambling ads in an effort to end this anomaly.
The beginning of the American football season has highlighted the impact on business, while the group added that it lost $3m last Sunday after 12 of the 14 games went against them.
The group also blamed the cancellation of all ice hockey games as a result of a players’ strike and the effects of the recent hurricanes for making the problems worse.
The timing of the warning is also highly embarrassing for Evolution, BETonSPORTSsponsoring broker, which has recently come under fire for the quality of the new issues it has brought to market.
BETonSPORTS is the third Evolution-sponsored float to issue a profit warning soon after listing after Medical Solutions (LSE: MLS.L – news) and Plant Health Care (LSE: PHC.L – news) .
At the weekend, fund manager Patrick Evershed of New Star said he is ready to boycott Evolution floats in future because of their subsequent performance.
Evolution floated BETonSPORTS at 140p in July after raising £55m, but the shares slumped more than 50% to 79p on today’s news.
In a statement the directors said they were “very disappointed” but view the future of the business with confidence and will maintain the dividend for that reason.
