CryptoLogic Shares Bid Up As Betfair Online Poker Deal Continues

Online gambling software maker CryptoLogic has received a reprieve on the end of a licensing deal with Betfair - which has provided as much as one-tenth of its revenue.

CryptoLogic said Monday its arrangement with Betfair won't end early next year as previously feared. Instead, the contract will continue until at least June and may be extended to January 2007, the Toronto-based company said.

"It is expected there will be no material effect on CryptoLogic's 2005 and 2006 results" from Betfair's previously announced plan to develop its own poker software and cancel its arrangement with CryptoLogic's WagerLogic licensing subsidiary.

CryptoLogic shares fell 17 per cent in one day in August after the company disclosed it could lose Betfair as a customer in early 2006.

The Betfair licence has typically provided five to 10 per cent of CryptoLogic's revenue, the Canadian company said. But revenue from poker licensees other than Betfair has doubled this year, and CryptoLogic's core business remains its casino software, which provides about 60 per cent of its revenue.

"We have enjoyed a mutually profitable relationship with Betfair and we are pleased that the relationship will continue in 2006," stated CEO Lewis Rose.

"CryptoLogic has grown into a well diversified organization - in its customers, products and markets. This means continued growth from our core customers, continued financial strength to invest in new products, and the continued prospect of new partnerships."

CryptoLogic's profit in the quarter ended June 30 was $4.7 million US, up 48 per cent from a year earlier, as revenue grew 33 per cent to $19.9 million US.

London-based Betfair, a five-year-old company which calls itself the world's leading betting exchange, has about 300,000 registered customers.

It claims Betfairpoker.com, launched in May 2004 using the WagerLogic central poker room shared by all of CryptoLogic's poker licensees, averages 18,000 active players per month.

"It has always been Betfair's strategy to own and operate our own software for all our core products," stated Steve Ives, director of Betfair Games.

"We are pursuing ways to do this and will be ready to proceed when the current contract expires. I'd like to thank WagerLogic for its pivotal contribution to Betfair Poker and we look forward to working closely with them in the coming months."

At CryptoLogic, "we have enjoyed a mutually profitable relationship with Betfair, and we are pleased that the relationship will continue in 2006," Rose said.

With or without Betfair, CryptoLogic "expects to continue its record of profitable growth from strong poker revenue from continuing licensees, healthy results from its core casino business, and the potential signing of new licensees that meet the company's rigorous criteria."