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Watson and Sky City place bet

By Nicholas Bryant

Friday 21st July 2000

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NEW FLUTTER: Sky City gets into online sports betting
Listed gaming company Sky City announced this week it would join entrepreneur Eric Watson in internet gambling company Canbet - the same week the US moved toward opening the floodgates of online betting.

Most of Canbet's revenue comes from the US.

In a surprise move the US House of Representatives turned down landmark legislation aimed at banning online gambling in the US, opening the way for American-based internet gaming operations to be set up in competition with Australian company Canbet.

Three days after the US announcement Sky City said it would take a strategic 33% holding in Canbet via two share placements, equalling Mr Watson's holding and that of other local investors.

Mr Watson is the principal stakeholder in Canbet, a Canberra-based sports internet betting company which listed on the Australian Stock Exchange in April.

It listed in the shell of e-tec, a former e-commerce company. Canbet deals with the placement of bets via phone or the internet on sporting events across the globe, with 95% of its customers betting from outside Australia.

Profits for the company have largely been from US sports, 72.2%, a lucrative business for cyber-gaming companies such as Canbet as most American states in the past have outlawed internet gambling or conducting lotteries online.

Monday night's decision saw the US House of Representatives reject the Internet Gambling Prohibition Act, which would have banned all forms of internet gambling, by a 245-159 vote.

Market analyst Frank Fernandez said the US vote, understood to have been the subject of heavy lobbying by wealthy Las Vegas syndicates, would lead to a proliferation of cyber-gaming sites in the US.

"There are nearly 700 cyber-gaming sites worldwide, the bulk of which are outside the United States but with their customer bases principally in the US," he said.

"The businesses of overseas internet gaming sites will be hit hard by the official sanction of online gambling in the US."

Canbet chairman Richard Farmer said the industry was growing so quickly it was a matter of increasing the company's book value via a deal like Sky City's or being swamped by competitors like William Hill and Ladbrokes.

Under the conditional agreement, Canbet will issue 16.67 million shares, with attached 1:1 options, to Sky City at A30c a share.

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