Poker no help to GigaMedia; Betfair’s Wass goes Wonga; Paddy Power tax plea

TAGs: Betfair, everest, GigaMedia, Ireland, Niall Wass, Paddy Power

gigamedia-betfair-wass-paddy-powerAsian online game software publisher GigaMedia Ltd. saw Q3 revenues fall 12% quarter over quarter to $7.8m, resulting in a core net loss of $3.9m. Everest Gaming – in which GigaMedia holds a 40% stake – reported total revenues of $12.4m ($9.2m poker), with 111k active depositing players and 27k new depositing players. However, Everest reported a total net loss of $14m for the quarter, $5.6m of which comes out of GigaMedia’s pocket.

CEO Yichin Lee blamed the downturn on “low levels of customer activity in our casual games and strong competition. Weaknesses are clear: our offerings are not broad or deep enough and our business unit operations are not efficient.” If the company hopes to avoid being delisted from the Nasdaq Global Market, Lee cited the need to restructure in response to “an ongoing, dramatic shift in online gaming from PCs to mobile devices.” As things stood, “our strategy as a publisher is not working.” (Wonder if Lee was this matter of fact when he gave President/COO Thomas Hui his walking papers earlier this month.)

Speaking of executives on the move, Betfair’s Chief Commercial Officer Niall Wass (pictured) is leaving the betting exchange to become Chief Operating Officer at London-based online ‘payday loan’ outfit Wonga. Rumors of Wass’ departure hit the wire on Friday, prompting Betfair to release a statement praising Wass for playing “a key role in bringing Betfair to where it stands today and we wish him every success in the future.” Despite the pleasantries, sources told Reuters that eight-year Betfair veteran Wass was miffed by the company’s decision to pass him over as replacement for outgoing CEO David Yu (a role that will instead be filled by Paddy Power COO Breon Corcoran).

Paddy Power CEO Patrick Kennedy has had a good week on the back of his company’s boffo earnings update and the subsequent 6% rise in its share price. But Kennedy remains troubled by the underwhelming performance of the home territory’s 210 retail outlets. In the peak year of 2007, Paddy’s Irish shops recorded operating profits of €35m. In the first six months of 2011, the shops earned €5m. Paddy has fewer shops in the UK (160), but analysts at Davy expect them to overtake the Irish shops in profitability this year.

Kennedy told the Irish Times that the struggling Irish economy had disproved the theory that gambling was recession-proof, noting that gambling was “one of the few sectors where people can pick their price point. The shops at an activity level have never been busier but the average stake per bet continues to decline.” As the government ponders doubling the current 1% betting tax, Kennedy wants them to recognize that Irish bookies expect to make a €12-15m operating profit this year. If a 1% tax equates to €30m, doubling it would move the sector “from profits of €15m to losses of €15m. I think that’s pretty clear.”


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