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The gaming sector hit the headlines for all the wrong reasons in October, when George Bush passed a bill banning Internet gambling in the US. Sportingbet and Leisure & Gaming have sold their US operations for nominal sums, while World Gaming plc called in the administrators.

Prior to this, it was a relatively quiet second quarter in the gaming sector, with just 14 transactions reported on MAIN Index compared with 21 during Q1. Nevertheless, select companies still completed acquisitions, raised development capital and took to London’s junior market during Q2.

Mergers and acquisitions

Some weeks before the arrest of CEO David Carruthers on racketeering charges, AIM-listed BETonSPORTS announced better news when it completed its $38 million (£20.2 million) acquisition of sportsbook brands Hooball and 777ball. The deal doubled BETonSPORTS’ Asian presence, with the targets integrated into the company’s existing Easy Bets operating structure in Malaysia.

AIM-listed holding company Leisure & Gaming plc completed two acquisitions during Q2. The first was its £32.06 million purchase of BetShop Group (Europe) Ltd, a London-based online sportsbetting and casino gaming business. The deal expands Leisure & Gaming’s online business reach in Europe through the BetShop.com Website and its land-based affiliate network.

Leisure & Gaming also spent $4.9 million (£2.5 million) on technology assets from Netherlands-based betting business IGW, including the online software platform already used by Leisure & Gaming subsidiary VIP.

Elsewhere, US lottery machine manufacturer Scientific Games Corp acquired London-based Global Draw Ltd, a fixed odds betting terminal supplier, for £96.8 million. Global Draw supplies Quick Draw terminals to more than 2,500 betting shops in the UK.

Investor Hermes Private Equity bought bingo club operator Mayfair Gaming in a secondary buy-out from Risk Capital Partners. Mayfair, which has a turnover of about £12 million across its eight UK clubs, has since acquired three new clubs and 24 adult gaming centres from Thomas Estates.

Another investor, Fairground Gaming Holdings plc, also made the headlines when it acquired online casino and poker business The Spin Palace Group in a $66 million (£35 million) reverse takeover from Roundit Ltd.

Other gaming deals reported by MAIN Index during Q2 included online casino operator 32Red’s £12.5 million acquisition of gaming company Bet Direct from Sportech, Stanley Casinos Ltd’s purchase of the Harbour House casino in Southampton for £5.9 million, and bingo hall chain Buckingham Bingo’s acquisition of the Stardust Bingo Club in Corby from Hamblin Leisure Ltd.

Funding

MAIN Index reported on two fund raisings in the gaming sector during Q2. Interactive Gaming Holdings plc, an online sports betting and gaming operator, raised more than £563,500 from a share placing to fund development costs and working capital.

Gaming company Million-2-1, meanwhile, received a £3 million investment from private equity firm Pi Capital. Manchester-based Million-2-1 operates mobile phone and Internet games in partnership with brands such as O2, Channel Four, TalkSport and Teletext. The funding will be used as development capital.

IPOs

Server-based gaming group Inspired Gaming joined AIM in June with a market capitalisation of £115 million. The Staffordshire-based company, which manages more than 90,000 machines across the country, placed 60 million shares with the help of Evolution Securities.

CheekyMoon Ltd joined the market when PLUS Markets-listed investment Pine Ventures plc bought it in a reverse takeover. Gillingham-based CheekyMoon provides online entertainment and gaming services, such as casinos, bingo and games such as NaughtyNetball.

Meanwhile, the chief executive of betting and leisure group Gala Coral confirmed that the company is considering an IPO during the next 18 months. In an interview with the Financial Times, Neil Goulden said it was "inevitable" that the company would eventually go to the public markets. The float could see an exit for private equity firms Permira, Cinven and Candover.

Rumours

Empire Interactive plc, an AIM-listed games developer and publisher, ended advanced takeover talks in late May but hinted that other deals could still be in the pipeline as it "continued its discussions with other parties".  

Bingo club operator Gala Leisure is considering selling a club after the OFT voiced concerns about one of its acquisitions. In January, the company bought County Properties and Development Ltd, a Scottish bingo club business. But since the OFT identified competition concerns, Gala is considering selling one of its clubs in Glenrothes.

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