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Poker News: November 8, 2006

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Copyright © 2006 Guardian News and Media Limited

HEADLINE: £20m jackpot for Paradise Poker's three founders

Author: Simon Bowers

Three Canadian founders of Sportingbet's Paradise Poker business yesterday shared a payout worth more than £20m after operating profits reached a milestone.

The payout was triggered after Paradise Poker achieved an operating profit contribution of $150m (£79m) in the two years since it was acquired by Sportingbet. The milestone was reached shortly before US legislators passed new anti-gambling laws last month, sparking an exodus of operators from America - until then the largest online betting market in the world.

Sportingbet responded by closing its Paradise Poker operations in the US, a move that wiped 80% of its poker revenues overnight. The website is now expected to generate an operating profit of about £10m a year. Last year the figure from the website had been about £60m.

The Paradise payout was made to Bonaire, a British Virgin Islands company, believed to be controlled by three Canadian technology experts. They remain Sportingbet's second largest shareholder, with 11.5%, but their identities have been kept hidden. Bonaire was paid an initial amount of £102m in cash and 56.6m shares when it sold Paradise to Sportingbet.

In another piece of good timing for the Canadians, Bonaire raised £65m by selling 17m shares earlier this year when Sportingbet stock was trading at 385p. In addition, Paradise founders are entitled to a further 10% of all operating profits in the current financial year.

Sportingbet last month wrote down two-thirds of the £186m goodwill value of the Paradise acquisition. Chief executive Andy McIver conceded further writedowns may have to follow.

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