The London-listed online betting firm Betbrokers has confirmed that it is turning down bets due to a funding shortage, British business media reported this week.
Founded 4 years ago by Wayne Lochner the internet gambling business places bets for anonymous high rollers and has among its directors highly experienced businessman Derek Tullett and Eddie Jordan, the former Formula One motor racing team boss.
Lochner, the chairman and chief executive, told The Times that the company was not struggling for survival, but he conceded that, in order to take all the bets that its customers wanted to place, it needed to raise another GBP 1 million to GBP 2 million of extra capital.
“We're not going to close down,” Lochner told The Times. “We're the victims of our own success. We are being offered more business than we can currently execute. We have to find a way of increasing our capital so we can clear the transactions.”
The market value of the company, which describes itself as a “retail and wholesale brokerage for the sports betting industry” has collapsed from GBP 31.7 million to GBP 1.5 million since its flotation in November 2006. About 60 percent of its business comes from bookmakers seeking to hedge their bets as part of risk limitation strategies, with the balance coming from wealthy punters who use Betbrokers to shop around for the best price on large bets.
Lochner said that the GBP 495 000 raised in March via a loan note had helped, but was not enough to cope with recent trading activity. He said that, with Daniel Stewart, his financial advisers, he was looking at options for raising fresh capital, including tapping directors and Betbrokers' roster of well-known sporting “ambassadors”, including Lester Piggott, the former jockey and Vinnie Jones, Nasser Hussein and Barry McGuigan.
Lochner, whose last company, Affinity Internet Holdings, collapsed in 2003 after the dot-com bubble burst, said that the funding situation could be resolved “in the next few days”.
In a trading update, Betbrokers said that the average deal size in May had fallen from GBP 1 370 to GBP 424 on a year-on-year basis as the company was “forced to turn down a majority of bets due to a lack of available funds in the clearing house”. Traded volumes during the month fell from GBP 4.47 million to GBP 2.27 million, but it still expects to make a full-year profit.
Betbrokers shares plunged 23 percent to 0.5p. Asked whether he might take the company private if the shares failed to recover, Lochner replied: “It's not on the table right now.”