UK likely Sky City bet

By SIMON HENDERY leisure industry writer

Casino operator Sky City's gambling empire could soon extend to Europe with the internet bookmaker it part-owns threatening to quit Australia for Britain.

The chairman of Canberra bookmaker Canbet, Richard Farmer, said the company would be forced out of Australia if a Federal Government proposal to ban Australians from placing online bets becomes law.

Sky City bought a 33 per cent stake in the ASX listed company last year. Auckland entrepreneur Eric Watson's Cullen Investments owns a further 9.9 per cent.

The Australian Government's proposed online betting ban is a reaction to concerns about problem gambling and its potential to escalate through the internet.

Although only about 5 per cent of Canbet's existing business comes from Australian punters, Mr Farmer said the company could not continue in business under the proposed law because it would risk large fines if it inadvertently took illegal Australian bets.

If Canbet, which has about 20 staff, was forced to move, Britain was its preferred destination, although other countries were also being considered, Mr Farmer said.

Sky City paid an average of 17.2Ac for its 113 million Canbet shares, which were trading at 6.8Ac yesterday amid market concern about a law change.

Sky City's managing director, Evan Davies, said the company was comfortable with its investment in Canbet, which was performing well.

"One would always prefer not to relocate but the UK environment appears to be very encouraging and if we are required to participate in the shift of the business then so be it," he said. "It opens, prospectively, a bigger opportunity."

At yesterday's market price, the paper value of Sky City's shareholding has dropped $A11.7 million ($14.5 million), but Mr Davies refused to comment on whether Sky City would be forced to write down its investment.

Research director Robert Gee, of CIBC World Markets in Perth, said Canbet was a profitable company with a growing turnover which was undervalued at its present share price.

"They believe they could move lock, stock and barrel fairly easily and there wouldn't be any disruption to their business."

Mr Gee said Sky City's investment in Canbet was sound, despite the share price slump. "Once this uncertainty is out of the way, then you'll see the share price improve."

He expected Canbet to make a profit of about $A10 million over the next year on turnover of about $A360 million, 85 per cent of which is bet by US-based punters.

A Senate debate on the proposed new law is due late this month and Mr Farmer said he expected the vote to be closely split.