LONDON (Alliance News) - Sportech PLC said Wednesday its loss for the first half of 2018 widened as it continued to focus on becoming a licensed operator in the US state of Connecticut following changes in betting legislation.
For the six months to June 30, the betting technology business posted a pretax loss of GBP602,000 compared with a GBP320,000 pretax loss recorded a year prior, as revenue dipped 5.7% to GBP31.6 million from GBP33.5 million a year ago.
The widened loss and revenue drop was attributed to absence of gains in currency movements. In the first-half of 2017, the company recorded GBP2.3 million gain on exchange rates. Excluding exchange rate impact, revenue rose 1.3%.
In addition to that, the company booked higher corporate costs of GBP759,000 compared to GBP477,000 a year prior.
On a divisional basis, revenue in Venues unit improved slightly to GBP15.8 million from GBP15.1 million the year before, boosted by food and beverage sales across Stamford, Connecticut Bobby V's restaurant & sports bars. For the first-half, food and beverage revenue was up 79% over the prior year at constant currency.
Meanwhile, revenue in Racing & Digital segment remained broadly flat year-on-year at GBP16.6 million. During the period, the company said it completed the development of its new HTML5 version of G4 betting website with "initial launches underway".
Bump 50:50, which is a part of the Racing & Digital division, continued to grow, with customer base increasing to 72 professional teams from 48 teams a year earlier. Thus, revenue for the segment grew by 42% to GBP700,000 from GBP500,000.
The company said it plans to expand Bump 50:50 to new mobile-focused markets, with these development projects taking place in the reminder of 2018.
Turning to US sports betting, Sportech said it is working "proactively" with constituencies in the US state of Connecticut to secure the right to conduct sports betting and become a licensed operator in the state.
Since 1992, the federal Professional & Amateur Sports Protection Act restricted US states from legalizing sports betting. However, in 2012, former Governor of New Jersey Chris Christie signed legislation to permit Nevada-style sports gambling.
The regulation was sued and accepted for review by the Supreme Court. In May, the Supreme Court ruled that Professional & Amateur Sports Protection Act of 1992 was unconstitutional.
Following this decision, other US states have moved to introduce legislation that would legalize sports betting.
The company has already begun the the integration and pre-sales processes in Connecticut to allow Sportech to be a significant operator and solution provider in the US sports betting business, investing GBP490,000 in the first-half of 2018. The company expects total expenses for licenses to reach between GBP1.1 million and GBP1.3 million for 2018.
"The May 2018 US Supreme Court decision that effectively permitted US states to enact legislation to license and regulate sports betting was very exciting for Sportech," Chief Executive Officer Andrew Gaughan said.
Gaughan added: "In Connecticut, we believe that we will have a strong direct-to-consumer sports betting offering for our brick-and-mortar and web mobile betting services."
At the end of May, Sportech signed a commercial sports betting agreement with digital content provider Sportradar AG. Under the deal, Sportech will provide trading and risk management services to Sportradar, while also deploying Sportradar's turnkey sports betting platform across its retail business in Connecticut.
Looking ahead, Sportech said it expects one-time sales revenue to be lower as the Racing & Digital market in the US shifts from one-time sales contracts to long-term service-based contracts.
Sportech shares were trading down 2.7% at 66.94 pence each.
By Elena Cherubini and Evelina Grecenko
elenacherubini@alliancenews.com; evelinagrecenko@alliancenews.com