Online gambling company bwin.party warned that full-year revenue would fall by up to 17% as it shrinks the business to focus on fewer markets where it can make higher returns.
The company, formed by the 2011 merger of PartyGaming and Bwin Interactive Entertainment, is focusing on regulated markets and is also preparing to expand in the United States as markets open up there.
The strategy, which sacrifices short-term revenue in an attempt to produce a more stable business model, is similar to one being followed by betting exchange operator Betfair .
Bwin.party, which offers sports betting and online games, is focusing on fewer, higher-paying customers to increase its average yield per player. That metric rose 7% to 9.6 euros ($12.7) in the first half of the year. The company did not give a long-term yield target.
However, as a result of the new strategy, Bwin.party, which has cut investment in 18 non-core markets including Brazil and Cyprus, expects full-year revenue to be between 14% and 17% below the 801.6 mln euros reported last year.
The earnings before interest, tax and depreciation (EBITDA) margin will likely be 2 percentage points lower than last year's 20.6%, the company said.
Bwin.party said first-half EBITDA fell 34% to 60.7 mln euros and that like-for-like revenue in the eight weeks to August 25 fell by a fifth.
Shares in the group were 14.6% lower at 108.7 pence, their lowest level for seven months, valuing the business at around 920 mln pounds.
Bwin.party's recent trade has been hit by the introduction last year of a turnover tax on sports betting in Germany, its largest market, and competition in the bingo sector in Britain and Italy. It also suffered after Greek internet service providers unexpectedly started blocking gambling websites.
The company, which plans to roll out a new version of its popular partypoker game in the coming months, said its systems were being installed ahead of an expected launch of poker and casino games in the U.S. state of New Jersey in November. It hopes to cut 70 mln euros of costs this year, increased the half-year dividend by 5% to 1.80 pence per share, reflecting its confidence on new products, the 2014 soccer World Cup and the prospect of U.S. expansion.
