Sports betting company reports decline in net loss

Wednesday, Sept. 22, 1999 | 11:56 a.m.

American Wagering Inc. of Las Vegas reported a net loss of $432,000, or 6 cents per share, for the second quarter, as the company absorbed start-up costs for its new Australian-based Internet wagering business.

The company's results were improved significantly from losses of $1.13 million, or 15 cents per share, reported one year ago. However, the company improved its earnings for the 1999 quarter significantly through the sale of its hotel, food and beverage operations.

Without the $554,000 in income derived from that sale, American Wagering would have lost $986,000, or 13 cents per share. The company said it recorded wagering losses of $251,000 from Mega$ports, its Internet sports betting business based in Canberra, Australia.

Still, the company saw its revenues rise to $2.26 million in the quarter, a 38.2 percent increase over a year ago. That increase was entirely driven by a 95 percent increase in revenues from CBS, the dominant provider of sports and race book equipment and software in Nevada.

At the same time, the company's wagering revenues fell $84,000, or 10.4 percent. The company took in a total of $21.77 million in bets for the quarter.

"With sports betting revenues, your handle can surge but if the games go against you, the wagering revenues could be very low," said American Wagering Chief Executive Vic Salerno. "With our expanded Systems division, we generate an increase in recurring revenue with the goal of generating a constant revenue stream without the volatility of sports wagering."

American Wagering's primary business is Leroy's Horse and Sports Palace, which operates 45 sports books in Nevada.

The Internet subsidiary, together with American Wagering's new keno business, caused the company to take start-up expenses of $429,000 for the quarter.