Mybet issues revenue warning, makes big bet on German court fight

mybet-revenue-warning German online betting operator Mybet is warning investors that its downward spiral shows no sign of abating this year.

In a brief statement released Wednesday, Mybet wanred investors that its preliminary read of its Q3 results showed revenue of around €35m through the first nine months of 2016. The company says Q3 showed a “continuation of the negative trend in revenues from the previous quarters.”

As a result of this ongoing revenue lethargy, Mybet says its previous forecast for FY16 revenue coming in between €59m and €62m “is no longer realistic.” The company is now projecting FY16 revenue to come in between €43m and €46m, a difference of €16m.

Mybet insists that its forecast of “positive low-seven-figure EBIT” remains unchanged, thanks in part to the June sale of its stake in the race betting business, which provided a one-time cash injection of nearly €10m.

Mybet’s H1 report showed a net profit of €4.2m over the first six months of 2016, but the company says it would have recorded a net loss of €2.3m were it not for the effect of its Pfederwetten sale.

Mybet’s core sports betting revenue fell 17% to €6.9m in Q2 despite the impact of the Euro 2016 football tournament, a downturn blamed largely on its faltering Greek market business. The casino division – formerly casino & poker, but Mybet shut its poker operations in June – fell 31% to €4m. The company’s nascent B2B division, which provides sports betting services in Belgium and Ghana, contributed €500k.

Mybet is pinning hopes for a turnaround on its new IT platform, which was supposed to debut ahead of Euro 2016 but didn’t arrive until mid-August. It’s nearly November and the site remains in beta mode as the company works out the kinks, apparently aware that it can’t afford a misstep at this point.

Last week, Mybet announced that it had arranged an interim financing agreement with an unnamed party for the “potentially arising proceeds” from the company’s lawsuit against Westdeutsche Lotterie GmbH & Co OHG.

(By way of background, in April 2014, a Düsseldorf court awarded a Mybet subsidiary €11.5m in damages for what Mybet called the “illegal boycott of its business by the German Lottery and Pools Organization, in breach of competition law.” Deutsche Lotto and Totoblock has appealed this judgment.)

The financing agreement is structured as a €4m credit facility – with an option to go to €5m – with a variable profit participation. The deal requires Mybet to repay any loans taken via the credit facility at a rate of 150%. If the court case drags on for over one year from the point at which the loan is drawn, the rate of return increases incrementally to a maximum 200% if the delay stretches to 2.5 years.

The unnamed creditor also gets 15% of the proceeds that might remain after the settlement of the time-dependent payment. On the plus side, if Mybet doesn’t collect any money from the court case, “the loan will not be repaid and there are also no other rights of recourse or repayment for the creditor.”

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