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29.07.2009, RBS Seeks Investors for Online Gambling Gala Coral / Online Gambling Totesport Goes With Cryptologic / Online Gambling May Suffer From Credit Crunch

RBS Seeks Investors for Online Gambling Gala Coral
The Observer newspaper recently reported it had news of the possible sell off of the Gala Coral land and online gambling group. The Royal Bank of Scotland was reportedly searching for investers to bail out the debt ridden gambling operation. Gala Coral's operations have been adversely affected by the downturn in the economy as well as the higher tax imposed recently by the U.K. government and not to mention the ban on smoking in it's bingo halls. It is reported to be GBP 2.7 billion in the red.

The Royal Bank of Scotland acts as an agent for the senior debt holders involved and therefore has much influence although it has a relatively small direct exposure to the debt.

The banks introduction to the presentations were palin and to the point inviting investors partake in the gambling group or to bid for any of its bingo, casino, betting- shop or online divisions. The RBS invitation read, "The Gala Coral company needs to address its debt burden and is considering a number of options to raise cash. Candover and Permira are financially strained and unlikely to be willing to inject more equity." The conclusion mentions the alternative to further investment being found of spinning off "one of the company divisions."

Deadlines are loomingfrothe group which needs to repay loans of 80 million GBP by September of this year and GBP150 million by 2010. The Group had no prior knowledge of the RBS actions and did not give permission for the bank to make this move. Candover, Cinven and Permira are the private equity houses that jointly own Gala Coral Group and have been persueing investors for funds to ease the debt situation. Their efforts to raise GBP 200 million have been slowed recently by the economic slowdown in the United Kingdom.

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Online Gambling Totesport Goes With Cryptologic
Cryptologic, the now Irish headquartered, Canadian pioneer online gambling software developer has penned an agreement with the Totesport the UK wagering company. Established by an Act of Parliament in 1928 the Tote is now the fourth largest bookmaker in the UK. Its original purpose was to offer on-course pool betting on horseracing as an alternative to starting price betting with bookmakers and to distribute its profits for "purposes conducive to the improvement of breeds of horses or the sport of horseracing". This company has definitely come along way and will shortly be online with at least six of Cryptologic's most popular slot games for the Totesports web site.

Back in June of 08 Minister for Sport Gerry Sutcliffe announced that Mike Smith would take the helm as the new Chairman of the Tote. Mr. Smith said then about his appointment, "We all recognise the need to bring certainty to the Tote’s future as quickly as possible." He is fulfilling that goal with the addition of Cryptologic's games.

Orbis Technology, one of the world's top platform solutions providers for the gambling industry will launch the Cryptologic games by the third quarter of this year. Cryptologic will receive its revenues from the wagers placed on Totesport which in the past has proven to be succesful mainly because of the quality of the games.

Cryptologic now has 23 licensees to it's credit. Vice President of CryptoLogic, Justin Thouin, said of the multi year agreement, "Totesport is one of the most respected brands in the UK betting industry and we are delighted that its customers will be able to pit their skills and enhance their enjoyment with Cryptologic games. With this agreement we now have consolidated our strong position in Britain's online gaming sector with a goal to return to long-term growth."

The Tote has annual revenues of GBP 2.8 billion, 4 000 employees, and over 500 high street shops in it's stable. E-Gaming and Marketing Director of Totesport, Keith Oliver, said, "Our agreement with Cryptologic brings together two very trusted brands from bookmaking and gaming content. We are confident this collaboration will not only bring a new level of enjoyment for our customers but will also help to drive our ongoing expansion into online gaming."

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Online Gambling May Suffer From Credit Crunch
Banks and credit card companies in Europe are steadying themselves for the big crunch that's looming as debtors default on their credit card balances. Recent reports from the International Monetary Fund have calculated the consumer debt in the USA is as high as $1,914bn USD. The estimated default percentage is a staggering 14% of that total. Europe will begin to feel the same sort of crisis as consumers in the E.U. fail to meet their obligations.

The International Monetary Fund also has calculated the estimated consumer debt in Europe to top $2,467bn USD and as much as 7% of that figure is expected to go to default. The United Kindom is the continents largest borrower on the books and much of the loss will be felt in that nation. This is not good news for those involved in online gambling operations as gambling debt on credit cards is a major portion of revenue for the companies. As borrowing becomes more risky to the credit card company's tighter controls will be put in place and the online gambling industry is bound to feel the pinch. The collapsing U.K. housing market and tighter restrictions on lending by banks has limited the indebted consumers ability to access home equity and pay down high interest credit card loans. Again as credit gets harder to acquire online gambling firms are sure to see a downturn in their revenues.

An analyst at Credit Suisse, Jonathan Pierce commented recently, that UK credit card securitisation had suffered "a very sharp rise in arrears to a level well beyond the previous peak seen in 2006". Lloyds Banking Group has a huge uninsured debt load that is in severe jeopardy if the current economic crisis continues.

Barclays,the UK’s biggest credit card lender with 11.7m U.K. customers said it's default levels had risen sharply in the last year due to unemployment and rising costs. European economic trends trail behind the USA by approximately six months so analysts are watching the US money markets closely for more intensive default action. All in all everything in this world is a bit of a gamble, in this case the banks are definitely hedging their bets.

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