The Weather Lottery sells Devilfish Poker business for nominal £17th October 2013 8:48 am GMT
As part of a decision to wind down its online gaming division, AIM-listed The Weather Lottery (TWL) has agreed to sell its online poker subsidiary Devilfish Poker for a nominal £1, having concluded that it does not have “sufficient critical mass” to provide potential for attractive future returns.
TWL said that the company’s board had conducted a strategic review of its operations, concluding that its Lottery and Gaming & Payment Software divisions would be the focus for the company moving forward.
The board concluded that its online gaming division does not have “sufficient critical mass to provide potential for attractive future returns”, with activity in its FC Betz sports betting subsidiary now ceased following a final wind down at the end of its financial year ended July 31st.
TWL decided to sell the Devilfish Poker business after activity levels continued to decline during the second half of the year, with total sales for the year amounting to just £35,000.
The business has been sold for a nominal £1 to Jeff Williams, the former managing director of the company’s online gaming division. Williams will also assume responsibility for items which would otherwise have resulted in a £60,000 charge to TWL’s balance sheet.
TWL had acquired the business for £330,000 in December 2010 in order to create a gaming division to complement its existing lottery management business, claiming at the time that the company could benefit from the “undeveloped potential” of the brand.
Devilfish Poker was founded by poker professional David “Devilfish” Ulliott and was listed on London’s PLUS market in March 2008 with a market capitalisation of £3.2m.
Despite its relatively strong brand, the company was beset by problems as it fell victim to the UK’s white-list of approved online gaming jurisdictions after Kahnawake failed to receive approval for white-listing. That resulted in the company being unable to advertise in its core UK market.
The company then migrated to the Entraction gaming platform allowing it to legally advertise in the UK, however mounting losses during and immediately after the migration resulted in the company being forced to cut back on marketing expenditure and therefore unable to reach sufficient scale to achieve profitability.
During its near three-year ownership, TWL was unable to turn around the business which continued to generate losses during the period and saw sales dwindle.
TWL will now focus its attentions on its existing lottery business, as well as its new Gaming & Payment Software divisions which includes the recently acquired Poseve and Sormelle businesses that provides online payment systems for Ladbrokes among others.
The lottery division is currently in the process of having a major overhaul of its systems and software, including the launch of a new website through which players will be able play online. TWL expects to initiate a “vigorous” marketing campaign and invest in new business development staff in order to more than reverse the 10 per cent decline in sales in its most recent financial year.
TWL chairman Lord Tim Razzall said: “We believe the Group has made significant progress since May. The acquisitions of Poseve and Sormelle have created a new exciting division of activity that is already producing a positive contribution, both directly and in terms of reinvigorating our traditional lottery business.
“The Board believes that both the Lottery and Gaming and Payments Software divisions offer significant growth potential for the future.”
Shares in The Weather Lottery (AIM:TWL) are currently trading at 0.14 pence per share in London this morning.