Net Bet Blog

Neteller (NLR) the online payment processor that many gamblers world wide use to transfer payments (including me) issued a decent pre-close update today. Shares were down 4% in early trades in a weak market.

The story is one of "steady as she goes". I suspect NLR will be taken out at some point possibly at a price around the £1. Not a bad one to tuck away.

Pre Close Trading Update (Neteller) [ADVFN]

Trading update

The growth trends in revenue seen in the first quarter have continued, with reported
revenue for the second quarter of the year expected to be approximately 10% ahead of the first quarter. Fee revenues from the Group's e-wallet have continued to show double digit quarter-on-quarter growth. The Group's sign ups and active customer growth have followed past trends whereby quarter two traditionally exhibits slower growth than the first quarter.

As anticipated the second quarter will produce a lower gross margin than the first
quarter, reflecting the impact of the Group's VIP rebate program which was launched in late April. However, the net impact of this program and other marketing initiatives is expected to result in a slight improvement in operating margin in the second quarter.

Overall, the Group has continued its good start to 2008 and therefore expects to report a result for the first six months in line with market expectations. The Group is continuing to invest in developing its businesses and the Board is confident of further progress in the second half of the year as the Group's growth plans remain on track.

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Neteller (NLR) the payments processor continues to grow and was tipped in the Scotsman on 22nd June 2008.

I am a supporter of NLR and use it frequently. I have yet to pay them anything but use the service to transfer funds into my online gaming accounts. A little too much money going out from my bank to NLR to gaming site and not the other way round for my liking but at least NLR are great at doing their part.

The surprise is the share price. NLR is a well known brand and growing. This is one I am keeping a close eye on. Takeover rumours are never far away. I would argue NLR would fit very well into 888's expansion and B2B programme but it would cost them a pretty penny.

Neteller growth pays off [Scotsman]

THE online payments industry is growing fast and Neteller claims to be one of the best placed to take advantage. Shares in the company, the world's largest independent money transfer business used by individuals and retailers, soared on a strong trading update last month.

It reported that April fee revenues were up by 15% on the previous month and that efforts to broaden its product range were paying dividends.

Shares rose to a year high of 73p after the update but have since fallen to around 60p. Last week three directors increased their stakes, suggesting they believe the fall is temporary.

President and chief executive Ron Martin bought 50,000 shares to bring his holding to 60,000. Chairman Dale Johnson bought 16,000 shares to increase his holding to 25,000.

Non-executive director Don Lindsay bought his first stake in the company with the purchase of 20,000 shares. All were bought for around 60p each.

Lord Sheppard, non-executive chairman of recruitment and human resources business OneClickHR, has upped his holding in the company despite a recent rise in its share price. He bought 250,000 shares at 4.35p each and now holds 4.5 million.

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In our series of totally unsubstantiated rumours we are happy to report that Neteller (NLR) may be in bid talks.

In the spirit of testing the companies I report on I use Neteller regularly (unfortunately the money tends to go in one direction). The product is high quality and I have never had any problems. It is quick, efficient and importantly, totally and utterly free if used sensibly.

The FT reports:

Neteller presents juicy target [FT]

By Neil Hume and Michael Hunter

Published: May 15 2008 03:00 | Last updated: May 15 2008 03:00

Neteller was in demand late yesterday amid rumours that the online payment processor had received a takeover approach.

Traders said they would not be surprised if there was something in the speculation. Recent trading has been good and the company has cash and cash-equivalents of nearly £25m, against a market capitalisation of almost £80m. Neteller closed 6.7 per cent higher at 68p.

NLR is certainly worth the broker targets of around £1.12. I think it is worth more. It is cash rich, in a growing market, has a credible position in the financial market (with NETBANX) and would make an excellent purchase in the same way PayPal was an excellent buy for EBay. If NLR can crack Asia where it is making good progress we could be back to the £4.00 level. Re-entry to the US is also a future possibility. Undervalued at present.

If any company executives are reading, you know who you are, my advice would be to tell 888.com to buy NLR. This may indeed be one of the interested parties but 888.com, if you are not currently looking at NLR then I recommend you do so.

In other news NLR released an AGM statement this week. in light of the "rumour" I present the full text of the statement here.

"Since my statement to shareholders at our last Annual General Meeting in August 2007, I am pleased to report that the NETELLER Group has made substantial progress in rebuilding and repositioning its business to achieve its three year vision of becoming the leading provider of bold payment solutions to selected online communities.

Our restructuring into Merchant Services and Member Services divisions, launched at the start of this year, has enabled us to begin to deliver our full payment product suite to merchants both within and increasingly outside of our traditional online gambling base. The contract wins recently announced by our NETBANX gateway business are examples of this broadening of our merchant base. We continue to add
solutions and develop partnerships that over time will facilitate much broader and more cost effective use by our end-user consumers of their e-wallets. The launch of the Net+ card programme later this year should make the NETELLER e-wallet an even more compelling alternative payment solution for individuals who value security, privacy and simplicity when transacting online.

The board is pleased with the progress the Group has made in the year to date. rading in the first month of the second quarter has shown promising signs that the Group's programme launches and product initiatives are delivering increased revenue, with April's fee revenue (excluding revenue from the Group's gateway businesses, NETBANX and 1-PAY Direct, the 1-PAY e-wallet in Asia, foreign exchange and investment income) recorded at $3.8 million, an increase of 15% from March's comparable revenue. The second quarter is traditionally slower for the online gambling industry. Despite this industry trend, initial indicators are suggesting that the impact of our broadening product range and focus are already beginning to deliver benefits to the Group. With continuing emphasis on ensuring our cost base is appropriate to effectively support our growing operations, the Group is generating positive cash flows from operations on a month-by-month basis.

I extend sincere thanks to all of our employees for their continuing efforts in helping to build our rapidly evolving business across the world, to our shareholders for their continued support and commitment to NETELLER, and to our customers and merchants for continuing support of our offering and business. The board looks forward to continuing progress during the balance of the year and beyond.

The Group's next formal announcement will be an update to shareholders on the Group's
progress prior to entering our close period in July 2008."

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Neteller (NLR) has been leveraging its NETBANX product well recently and today's RNS show how far this has come. Whatever happens to the online gaming revenues NLR will always have a market thanks to NETBANX although revenues remain small in comparison (for now).

These sort of deals enhance NLR's credibility and global reach. A good move.

Netbanx agrmnt with easyBus [ADVFN]

Group continues global payments and industry diversification strategy

Wednesday 7th May 2008 - The NETELLER Group (LSE: NLR), the independent global
online payments business, has deployed a new internationalised version of its
NETBANX payments gateway service to merchants, including new merchant easyBus,
the airport transfer operator which is part of the easyGroup, founded by
Stelios.

The new international version means that customers can easily pay online in
their own currency and language, using local or global payment cards or other
local payment options. This improves choice for consumers, as well as giving
them a better rate of currency exchange. For merchants, this means they can
improve customer loyalty, customers are less likely to abandon a purchase, and
merchants share revenues generated from in-stream foreign exchange.

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Neteller (NLR) the online payment processor today released a relatively upbeat trading statement.

During my testing of different affiliate schemes as part of my company research I can vouch for the quality of Neteller. I can transfer money in and out of online Poker and Casino sites will speed and ease (unfortunately there is more of the "in" than the "out").

NLR shares were up nearly 3.5% to 60p in early trading.

Here are the highlights. This long trading statement gives additional breakdowns by region and detailed KPIs.

Trading Statement [ADVFN]

Renewed focus on merchant and consumer customers drives contract wins for
NETELLER e-wallet and NETBANX payments gateway business.

* Continued investment in improving product offering in core European and Asia
Pacific markets.

* European revenue (including NETBANX) was $11.3 million, an increase of 9%
from Q4 2007; Asia Pacific (including 1-PAY Direct) grew 20% to $3.6 million
over the same period.

* Active e-wallet users (ex North America) totalled 101,301 in Q1 2008, up 1%
from Q4 2007.

* E-wallet revenue per active e-wallet user was $113 in Q1 2008, up 7% from
$106 in Q4 2007.

* Average daily sign ups and average daily receipts in Q1 2008 showed growth of
6% and 11% respectively from Q4 2007.

* Strong cost control continues in Q1 2008, with gross margin of 62% (Q4
2007: 54%) and operating income of $2.4 million (Q4 2007: $0.6 million loss).

* Solid balance sheet at 31 March 2008 with $55.2 million cash and cash
equivalents.


Ron Martin, President & CEO, commented "The business has continued to deliver a
good performance in the first quarter. We are beginning to see tangible sales
progress in the adoption of our Merchant Solution Suite amongst both gaming and
non-gaming customers and prospects. Growth in our key European and Asia Pacific
markets remains encouraging and as we introduce new payment solutions and
targeted marketing programmes, we hope to see this momentum continue. The Board
looks forward to continued progress and remains confident about prospects for
the business."

I would rate NLR as a share to watch and one worth a punt between the 50-60p range. No advice offered, DYOR.

Neteller (NLR) the e-wallet provider to the online gaming industry continued to grow non-US business and daily sign-ups remian healthy. Shares were up 1% in early trading.

NLR remain one to watch. Check out their offering here. I use Neteller and find the service excellent. Free and easy to use.

The joint venture is also promising.

The NETELLER Group (LSE: NLR), the independent global
online payments business, has established a joint venture, Centricom Europe
Limited, with Centricom Pty Ltd, to distribute the POLi service in Europe. Under
the joint venture, the Group also announces the launch of the POLi payment
service for the UK market, distributed through NETELLER's payment processing
arm, NETBANX.

so what is PLOi?

The POLi service is a safe and convenient method to make online payments.
Through the POLi service, consumers can make payments to merchants anywhere in
the world directly from their existing Internet banking service without
disclosing their bank or credit card details. According to reporting merchants
in Australia who have implemented POLi, the service now accounts for an average
of 23% of their total online payment transactions. The new UK service supports
transfers from all major UK high street banks.

A good move in my opinion and now the US final payments have been made it is time to push into Asia.

Highlights:

Financial Highlights

* Total revenue for 2007 was $84 million; revenue of $69 million from
operations outside of North America represented an increase of 15% from
2006.
* European revenue grew 28% to $41.7 million in 2007; Asia Pacific grew 44%
to $11.4 million
* Gross margin in 2007 was 56%, compared to 70% in 2006 and 55% in H1 2007.
* Loss before tax of $185.7 million after US settlement of $136 million and
related costs and restructuring expenses of $37 million.
* Cash flow from operations positive during H2 2007.
* Solid balance sheet at 31 December 2007 with $80.8 million cash and cash
equivalents.

Key performance indicators

* Active e-wallet users (ex North America) totalled 99,984 in Q4 2007, up 9%
from Q4 2006.
* Fee revenue per active e-wallet user was $124 in 2007, an increase of 8%
from $115 in 2006.
* Average daily sign ups were 1,191 for 2007, with 1,076 sign ups per day in
Q4 2007.

Operational Highlights

* Stabilised business and refocused merchant and consumer business divisions
to support our vision - to provide bold payment solutions for e-commerce
communities that power the efficient global movement of money.
* Revised the e-wallet look and feel to better connect with target
demographic - the first step in an overall Group-wide rebranding strategy.
* Payment product suite aimed at driving merchant value proposition and
extending consumer offering.

Current trading

* Trading during the first two months of 2008 showed continued growth from
2007.
* Final payment of $38.25 million made to US authorities on 16 January 2008.
* Sold Calgary property as announced in February 2008 - $33 million net
proceeds receivable on 31 March 2008.
* Announcement today of Centricom Europe joint venture to distribute POLi
online bank payment platform in Europe and UK launch of POLi payment service
through NETBANX.

Neteller (NLR) the online payments processor today issued a trading statement saying that it was confident of meeting expectations for the forth quarter.

It also expects to pay the balance on what it owes the US government as part of the settlement with regulators.

In other developments it announced that it had settled a law suit by paying out 1.75 million Canadian dollars and also that the Calgary property sale was being reviewed although NLR remained confident of an eventual sale.

Shares were up over 2% in early traded. NLR has fallen close to new lows recently and there is plenty of potential upside.

The outlook for 2008 is decent - plenty of product developments. It is a shame that there was no mention of Asian or geographical expansion in this update but the product developments are long over due.

Neteller Trading Statement [ADVFN]

Trading update

The Board announces that the Group's operating businesses have traded in line
with management's expectations in the fourth quarter and the Board is confident
that the full year results for the Group will meet market expectations.

The Company will make the final payment of US$ 38.25 million on 16 January 2008
to the US authorities in respect of its obligations under the deferred
prosecution agreement. This amount reflects recent discussions with US
authorities confirming that US$ 57.7 million of the Group's funds were seized,
as opposed to the US$ 60 million previously thought and announced. The total
amount to be paid to the US authorities in connection with this matter remains
the same as previously announced (US$ 136 million).

As part of the arrangements with the USAO, the Group implemented the
Distribution Plan to return approximately US$ 94 million of funds owed to US
customers. The Group has to date repaid approximately US$ 81 million of this
amount. Any unpaid amounts are currently held in trust accounts with the Group's
bank. Under the terms of the Distribution Plan, US customers have until 26
January 2008 to withdraw their funds using the NETELLER website.

The sale of the Group's principal Calgary property has been delayed as a result
of the lenders for the intended purchaser introducing significantly less
attractive terms in the wake of the recent developments in North American
financial markets. Consequently, the final condition to the Purchase and Sale
Agreement for the property has not been satisfied. Constructive discussions
with the intended purchaser and its lenders are continuing but there can be no
certainty that a transaction will be concluded. However, the Group is
optimistic about achieving a sale in due course given the current strength of
the Calgary property market.

The Group has also recently concluded a settlement with a third party vendor who
had commenced litigation against the Group for alleged breach of contract (as
previously disclosed in the Group's interim statement of 23 August 2007), paying
an amount of approximately CAD$ 1.75 million to settle any potential claims.

Building Momentum into 2008

During 2008 the Group will deliver a significant number of initiatives in
support of its strategic goal of providing innovative payment solutions for
online communities, including:

* Revitalised Consumer Brand: At the beginning of January the Group
updated its NETELLER Payment Network brand for consumers, at www.neteller.com.
The bold new brand is designed to appeal directly to the Group's core
demographic, with an offer of a suite of lifestyle financial services for the
online generation. The update creates a new brand platform for the release of
new consumer services throughout the year.

* Stronger Consumer Offer: During the first half of the 2008 the Group will
introduce significant enhancements to its consumer services, including a new
suite of highly secure and convenient card products, a new rewards program, and
a range of new payment options.

* Enhanced Merchant Value Proposition: During the first quarter the
Group will be announcing details of a broad new suite of e-commerce applications
for both gaming and non-gaming merchants. The suite, based around the Group's
existing core gateway and e-money wallet services, will help online merchants
create stronger customer relationships than are possible with other payment
solutions such as credit cards. The suite has already been deployed to a limited
number of merchants, with a broader deployment planned for the first half.

* Updated Merchant Branding: As the Group introduces its new payment
suite it will also be revising its merchant facing brands. The first of these
will be the Group's high velocity NetBanx payment gateway, in the first quarter.

The Group anticipates it will make further announcements as these initiatives
are rolled out during 2008.

Ron Martin, President & CEO, commented "Considering the significant challenges
that our Company has faced during the past year, I am pleased with the
performance of the business in 2007 and I am excited about the prospects for
2008. We have a number of key strategic initiatives which will be launched in
2008, commencing this week with the rebranding of our consumer-facing site,
www.neteller.com. These developments represent a step change in the products
and services we can offer our merchants and customers. I am confident about our
strategy and that these initiatives will be reflected in our performance for
2008."

The Company's next update will be the announcement of its preliminary results
for the year ended 31 December 2007 on Tuesday, 11 March 2008.

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The Financial Times reports on China's roll out of a lottery in Beijing.

This article is interesting for the signal that China is giving that it is moving to liberalise gambling. This has potential benefits to all but Asian facing firms may benefit the most. AsianLogic (ALOG), 888.com and Neteller (NLR) may be in the front line.

China poised for new lottery network roll-out [FT]

Beijing plans after the Lunar New Year holiday next month to begin a nationwide roll-out of a new lottery network, according to the joint-venture company contracted to build the system.

Chinese lottery revenues rose about 22 per cent to more than Rmb100bn ($13.8bn) last year and Citigroup expects the country, which banned gambling after the 1949 revolution, to become the world’s second largest lottery market by 2010 as regulators authorise more types of betting.

Nearly half the growth last year came from a new network of video lottery terminals (VLTs), slot machine-type games provided to China’s welfare lottery by a joint venture between US-based International Game Technology , the largest US gambling systems maker, and Hong Kong-listed China LotSynergy.

Daniel Liao, deputy chief executive of CLS, expects the lottery’s next growth engine to be keno, a bingo-like game that traces its origins to ancient China.

CLS first announced its contract with the welfare lottery for a national keno network three years ago. But the roll-out has been delayed as local governments, some of which had set up keno games with other foreign suppliers, sought to put their imprint on the system.

Australia’s Tabcorp, CLS’s original keno partner, withdrew last month after losing patience and was replaced by GTech, the US-based lottery unit of Italy’s Lottomatica. Mr Liao told the Financial Times on Wednesday that bureaucratic hurdles had been cleared: “The whole system has passed verification by every province. Different provinces have different ideas about what would be the most attractive to their customers,” he said. “It was a very tedious process.”

The initial roll-out will involve 2,000 terminals being set up in eight provinces, with another 2,000 to follow.

“My personal view is that keno definitely will be bigger than VLT,” Mr Liao said. ”In two years or three years, keno will definitely be bigger.”

China’s VLT network has expanded rapidly since 2005 to 22,077 machines, with an average of 1.5 VLT halls opening each day. Last quarter it generated Rmb4.5bn, a quarter of sales for the welfare lottery, the larger of China’s two operators. Mr Liao expects VLT sales to grow 50 per cent in 2008.

Mr Liao is more optimistic for keno as the game will not just be offered in dedicated gaming halls, but also karaoke lounges, coffee shops and foot massage parlours and the network will be able to support other games as well.

The CLS ventures collect 2 per cent of VLT sales and about 1 per cent of keno revenues.

Analysts impressed with the success of the VLT network are more cautious on the outlook for keno. “This game is still not proven in China,” Deutsche Bank commented in a research report: “It will take at least six to nine months for [the] new game to be successful.”

In a second article from China View the write about hints that China will also legislate on horse racing.

China hints at legalization of gambling on horse racing [China View]

BEIJING, Jan. 10 (Xinhua) -- The Chinese mainland could see its first official bet placed on a horse race since the Communist Party came to power in 1949 as early as next year.

The central government has approved the establishment of regular horse racing in Wuhan, capital of central China's Hubei Province, and is mulling over the introduction of gambling on the races in 2009.

The races would be held at the Orient Lucky City racecourse in Wuhan in September this year, according to a senior manager with the Orient Lucky Horse Group Cooperation, who did not want to be named.

The announcement is being seen as the beginning of gambling on horse racing on the Chinese mainland.

The Changjiang Times newspaper in Wuhan reported that betting will be launched alongside horse racing in September.

However, the manager told Xinhua betting on the races would probably not be introduced on a trial basis until 2009.

"Initially about 250 horses from different jockey clubs around the country will participate in the races," said the manager, "but betting can only be officially launched when the races draw at least 2,000 horses."

"The proposal of betting on horse racing is being reviewed and discussed but there is no concrete information on when or whether it will begin," a spokeswoman with the China Sports Lottery Administration Center (CSLC) surnamed Fang told Xinhua by telephone.

Qin Zunwen, an expert in the study of horse racing betting, said the business, once fully operational nationwide, could create three million jobs a year.

He told the Changjiang Times that annual lottery sales could reach a staggering 100 billion yuan (13.7 billion U.S. dollars), yielding 40 billion yuan in tax revenues,

"Offering a legal venue to bet on horse races could drive out illegal online gambling," he added.

Wuhan started to study the feasibility of introducing betting on horse racing in 2005 and has since submitted several reports to the Chinese People's Political Consultative Conference (CPPCC).

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Gambling911 today wrote an article saying that PartyGaming (PRTY) may have to pay up to $20m to the US government to settle.

This is a remarkably small amount given the cost to Neteller (NLR) (over $100m).

The writer of the article agrees:

Publicly traded online poker firm, PartyGaming, may end up paying the US government $20 million, assuming US officials plan on being especially generous.

Correct - it assumes that US officials will be very generous and there is no evidence to suggest that they will be. This makes the whole article rather pointless in my opinion. The title could have been "PartyGaming May Have to Pay £100m and say that is with US officials acting not particularly generously. All this does is set a minimum cost.

There is still something distasteful about this whole affair when the likes of PokerStars and FullTilt and hitting record numbers the majority of whom are US players.

Why can the government not shut these outfits down? You can bet none of the directors will ever set foot in the US but at least they will be incredibly rich.

SO why are PRTY looking to settle and why did NLR settle? Just to protect the behinds of their directors? I addition I suspect that this is seen as a way of paving the way for a return to the US if and when online gaming is regulated.

It is inconceivable that this will not eventually happen - one cannot turn back the waves of technology. Are PRTY therefore playing a long game?

This article below is to me (1) pointless and old news (2)badly constructed, (3) potentially misleading.

PartyGaming May Have to Pay US$20 Mil [Gambling911]

Publicly traded online poker firm, PartyGaming, may end up paying the US government $20 million, assuming US officials plan on being especially generous. That number is based solely on Party's $138.9m in 2006 pre-tax profits and discounts the previous few years it accepted bets from US citizens. The number is also based on the US government wanting 15 per cent back in tax monies.

PartyGaming has openly disclosed that they are working to settle any monetary issues with the United States. As such, it was revealed that few companies wish to deal with the one time largest online poker venture when it comes to partnership deals and potential acquisitions.

For years, Party siphoned millions of dollars out of the US economy. 80 per cent of its customer base resided in the US. By attempting to settle with the US Government, they have essentially placed their heads on the chopping block. We can use the reformed bank robber wanting to pay back the bank analogy here but we won't.

Party at one time was one of the biggest supporters of lobbyists in Washington looking to regulate online gambling prior to the passage of the Unlawful Internet Gambling Enforcement Act over a year ago. They immediately scrambled out of the US market but still remain a viable enterprise (the number three online poker room in fact).

Both US and foreign companies cut their taxes by profit shifting, but many lawmakers and tax analysts believe the practice is particularly widespread among foreign companies. More than 70 percent of foreign firms paid no tax each year between 1987 and 1991, the IRS reports, compared to about 60 percent of US companies. Clearly, some paid no tax because they did not make a profit, but many lawmakers believe others are illegally shifting profits overseas.

PartyGaming, while operating from the shores of Gibraltar, did have US citizens running the company at one time.

Search engine giant, Google, was recently ordered to pay $31.5 million just for promoting online gambling companies. In the case of BetonSports, an online gaming firm shut down in 2006, the US Government said the company faced a maximum that could be double the financial gain from or loss caused by the enterprise. Neteller, a third party payment transfer company dealing in online gaming, did not get off so easy. They were required to pay a $136 million fine to the US Government after a settlement agreement was reached.

Neteller, the online payment processor, incurred a loss on payment of the US fine but is still confident of the future.

The question is why have NLR paid this money when nothing of a similar magnitude has been paid by the likes of PRTY and 888? I suspect this may still be to come but it does seem that NLR have been the real whipping boys of the US regulation change.

NETeller posts Q3 loss on US forfeiture [ADVFN]

NETeller PLC reported a pretax loss for the third quarter due to the forfeiture of some 136 mln usd to US authorities as part of a settlement related to Internet gambling prosecutions.

Neteller Q3 Trading Update [ADVFN]

Highlights

* Continued progress to be pre-eminent provider of online gaming sector
related payments solutions

* Active customers (ex North America) up 14% to 94,925 in Q3 2007 from
83,627 (Q3 2006)

* Total revenue in Q3 2007 was $16.9m - fee revenue ex-interest increased
25% from Q3 2006

* European revenue in Q3 2007 grew 19% to $8.4m and Asia Pacific revenue
grew 41% to $3.0m both compared to Q3 2006 figures (ex-interest)

* Gross margin in Q3 2007 was 60%, compared to 55% in H1 2007

* Loss before tax in Q3 2007 was $145.9m due to US forfeiture and related US
expenses

* Cash at 30 September 2007 was $149.4m; $40m paid to US authorities on 15
October 2007

* Cash flow from operations positive in Q3 2007

All in all, a decent performance and continues to be the most high profile payments provider. Has a good chance to survive and prosper especially if the US once again opens up in years to come.

With positive cash flow and a growing number of customers there is ever chance that the share price will continue to recover.

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Update from Sportingbet's McIver on US talks, cancelled race meetings and current trading. Barcelona is the place to be to get the latest news, gossip and rumours.

From a share price perspective, news that trading is in line with expectations despite race meeting cancellations that cost around $200,000 is good news.

The other key points to note are as follows:

1. That the US government appears to have a "formula" - I expect that this formula will result in a cash figure that 888, PRTY and SBT have to pay to avoid future prosecution. Neteller appear to have had their fine agreed and it is not small. "They have never named a figure (fine) but talked about a formula... All the conversations we have had have all been amicable and have all been constructive."

2. Once the formula has been applied it is almost certain that we will get a rash of rationalisation and consolidation.

The effect on share prices is therefore likely to be two fold. A negative effect from the fine and cost of complying (this will not be cheap). What cost in currently priced into the share price? Second, the positive effect from any consolidation for the firms being taken over (not necessarily the company doing the taking over).

For now uncertainty reigns and the city does not like uncertainty.

Sportingbet in U.S. talks, trading on track [Yahoo news]

BARCELONA (Reuters) - Sportingbet is in talks with U.S. authorities over a deal that could end the threat of prosecution for taking bets there, the British gambling firm's chief executive told Reuters on Tuesday.

Andy McIver added that trading over the first two months of the company's new financial year had been "in-line with market expectations", with early season soccer results helping cushion horse race cancellations in Australia due to an outbreak of equine flu.

"It (race cancellations) has impacted around 200,000 pounds but not enough for us to issue a profit warning" McIver told Reuters on the sidelines of the European i-Gaming conference.

He revealed Sportingbet was, like rivals PartyGaming and 888.com, in talks with U.S. authorities to cut a deal to end the threat of retrospective prosecution for taking wagers from U.S. punters before online gambling was effectively outlawed a year ago.

"We are in talks. It's a very slow process, you work to their agenda," said McIver.

"They have never named a figure (fine) but talked about a formula... All the conversations we have had have all been amicable and have all been constructive."

The legality of Internet gambling in the United States was ambiguous for many years, but it was effectively banned last October when President George W. Bush signed legislation outlawing financial payments for gambling.

Since then, U.S. authorities have prosecuted some founders of online firms as well company executives.

If the threat of prosecution is removed, analysts say, there could be a rush of online gambling firm mergers as the biggest players look to bulk up their online poker networks and save on expensive software, call centres and advertising.

They say it will also allow firms to borrow meaningfully from currently wary banks to speed their acquisition ambitions as well as hand cash back to shareholders.

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The sixth annual European i-Gaming Congress and Expo is currently being held in Barcelona, Spain.

The great and the good are all there.

The following article from online-casinos.com provides an excellent overview of the events so far.

ONLINE GAMBLING INDUSTRY GATHERS IN BARCELONA

Numerous quoted companies are mentioned. Here are a few.

The first quote I have pulled out relates to the our recommended Poker room "PKR". Clicking the link below will demonstrate why we believe 3D poker via PKR is the fun future of poker. The link also provides rakeback as part of the Netbetblog promotion.

San [Jez San] revealed that the advent of the UIGEA dissuaded his company from offering services to US players when it launched. The 3D and content rich nature of the poker offering had ensured that it was encountering very little competition and growth had been spectacular, with the company breaking even in the first year.

and later:

San echoed Gigi Levy's comments on the importance of community, which he feels strengthens the product, adding that forums, avatars and more realistic and immersive 3D poker games were the way forward.

I tend to agree - to not try 3D poker is foolish in my opinion.



Other companies that get a mention include:

Neteller:

Martin made the understatement of the morning when he said that the past year had been unexpectedly unchallenging for Neteller and not much fun. The brand had been damaged and repair work was in progress he revealed.

Because of the unique and dangerous circumstances in which the company found itself in the issue with the US Department of Justice, it had been constrained in what it could do and say, and this had had an adverse effect on how it was perceived. However, the payouts to American players was largely completed, the negotiations completed and the company was moving forward with optimism and sound fundamental strengths.

later on Asian markets:

There seemed to be general agreement that the Asian market presented unique problems, evidenced by the many less than successful attempts to penetrate it over the past three years. Martin remained optimistic of Neteller's efforts, although he commented that financial systems were still immature, and similar shortcomings were present in South America.

888 Holdings

The keynote address was by 888 Holdings CEO Gigi Levy who opined that the phenomenal annual double digit growth of the industry and rapid technology developments meant that operators have hitherto been focused on the present instead of paying more attention to evolving trends that had been largely overlooked.

The Internet gambling industry had rightly been identified as the most successful of the online businesses to come out of the Internet, with good levels of expertise developed in marketing and technology, but there had been missed opportunities to capitalise early on trends that could have added even more impetus to development and business success.

Sportingbet

A confident McIver [CEO Sportingbet] addressed the question of whether the industry could have had more impact in a lobbying sense if it had acted with more cohesion, pointing out that sometimes going it alone was more productive than management by committee initiatives. He emphasised the importance of fighting corruption in sport, and was upbeat on the results of the recent UK Gambling Commission study on Gambling Prevalence which showed that despite the huge growth in online gambling, problem gambling levels remained largely unchanged, contradicting the opinions often put forward by industry opponents that online gambling was a major cause for concern. He succinctly pointed out that in fact a principal area of concern on problem gambling had turned out to be the government's national lottery!

He nevertheless added that the results of the study should provide a powerful incentive for the industry to maintain its high level of achievement in keeping problem gambling under control going forward.

Finally, there is considerable comment on US regulatory system that is worth reading.

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This article from online-casinos provides some interesting comments on how the US can get out the internet gaming mess it has got itself into. Otherwise it is merely a repeat of previous information that I have posted here at netbetblog.com.

The most interesting point to note is that iMEGA may be a way for the US to get out of the whole WTO compensation claim problem.

From the article below:

Most leading news magazines and papers are now covering the debacle in depth, analysing possible solutions which could be deployed to let the United States off the hook. Increasingly, the adoption of legislation such as Congressman Frank's Internet Regulation and Enforcement Act (IGREA) is seen as a way out for an increasingly beleaguered America.

It is time to look very closely at the Frank enforcement act and consider the ramifications for Europe based companies. How quickly could they return? Has the market changed? Would then be compensated? Would firms like Neteller (NLR) get their money back?

WTO TROUBLES COULD BRING THE UNITED STATES TO ITS SENSES

Hammering small island nations is one thing....taking on major trading partners like the EU is another

With World Trade Organisation members likely to be submitting compensation claims in the billions to the United States over its stance on Internet gambling, the international mainstream media is now taking serious notice of a dispute which hitherto appeared to involve only the tiny island nation of Antigua and Barbuda.

The plucky Caribbean nation has been fighting a lone battle against its massive neighbour for over three years now, conclusively beating the United States at every stage in its claims that the discriminatory nature of US online gambling law was in contravention of its World Trade Organisation treaty obligations (see previous Online-Casinos.com/InfoPowa reports)

But the latest American strategy - to take the unprecedented step of withdrawing its online gambling obligations, is what set the US on a collision course with at least seven other WTO member countries, including the European Union bloc which encompasses most of Europe's leading nations.

EU officials have already indicated that the initial and tentative US compensatory offers are a long way off fair and reasonable compensation for the billions in corporate losses which the US policy on online gambling has caused around the world.

Most leading news magazines and papers are now covering the debacle in depth, analysing possible solutions which could be deployed to let the United States off the hook. Increasingly, the adoption of legislation such as Congressman Frank's Internet Regulation and Enforcement Act (IGREA) is seen as a way out for an increasingly beleaguered America.

IGREA seeks to regulate and license online gambling in the United States and would not only solve the discriminatory problem caused by the USA's ambivalent policies allowing horserace, lotteries and fantasy sports online betting, but could make redundant the Unlawful Internet Gambling Enforcement Act which bans financial transactions with online gambling companies.

The UK newspaper The Guardian commented on the possibility in an article this week, opining that the ban could be overturned as negotiations between Washington and Brussels on compensation have apparently stalled.

The newspaper commented that lawyers for the EU are seeking compensation for the severe losses suffered by the British and European companies banned from operating in their biggest market last year, after the Bush administration signed off on UIGEA.

However the gambling companies, which saw billions wiped off their share prices after the ban, would not receive any cash if US proposals for better trade concessions on warehousing were accepted, and instead Brussels wants Washington to open up other areas of its services industry to European firms, such as insurance or reinsurance.

But such a deal could cost the US billions of dollars and it might therefore opt to allow overseas gambling operators back into its market under license.

The Guardian was told by an EU trade official: "The UK operators and others who have lost out would get nothing. But the Frank bill would go a long way to meeting our demands."

Experts at a Brussels press conference this week, including Naotaka Matsukata, former director of policy planning for the US trade Representative and Craig Pouncey, Brussels-based trade lawyer with Herbert Smith, said that the US and Europe were heading for a major clash over the dispute.

“The US$3.4 billion claim by Antigua and the much larger claim of over US$100 billion by the seven other economies seeking compensation are some of the largest penalties in the history of the WTO,” said Matsukata. “This is by far the most significant WTO case ever and its implications for both the US and the EU are enormous. Given the size of the US gaming market, both the potential benefit for European industry and the corresponding potential damage to US companies is unprecedented.”

The EU, Macau, India and Australia are among the countries seeking compensation over the US’ actions.

European and US lawyers warned this week that the dispute posed a "systemic risk" to the credibility of the World Trade Organisation after it ruled earlier this year that America acted in an illegal and discriminatory manner by excluding online gaming operators from the tiny Caribbean island of Antigua.

At the same time, the White House allowed domestic operators to offer gambling over the internet and withdrew its entire $100 billion gambling industry from its free trade commitments.

The EU online gaming industry, mainly based in the UK, employs 15 000 but faces a growing challenge from US operators such as Yahoo!, Google and Sands.

Jonathan Cohen, a New York-based public affairs consultant acting for EU operators, said the US legal regime was "wildly inconsistent" as it allowed online fantasy sports leagues, lotteries and racecourse betting but specifically banned other services provided by European firms.

Clive Hawkswood, chief executive of the Remote Gambling Association, said the European industry suffered from outrightly protectionist measures from the US. "It is using unjustified trade barriers to stop EU operators and a proper licensing system would attract many EU operators," he said.

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