On Monday, Sportingbet Plc. paid $33.3 million in cash and allotted 9.77 million shares to Bonaire Investments Ltd. The settlement was part of the agreement from when Sportingbet acquired Paradise Poker from the company.
Bonaire is a British Virgin Islands company believed to be owned by three Canadians who founded the poker site Paradise Poker. In October 2004, they sold the site to Sportingbet for £102 million in cash and 56.6 million shares.
Part of the purchase agreement was that once the site generated more than $150 million of operating profit, Sportingbet would make another payout to Bonaire. Paradise Poker reached that goal just before it stopped taking U.S. customers when the U.S. passed the Unlawful Internet Gambling Enforcement Act in late September.
After completing this transaction, Bonaire will have 11.47% of Sportingbet's issued share capital.
Bonaire is also entitled to receive 10% of the cumulative operating profits of the poker site in excess of $150 million for the three year period after the purchase agreement. That will be the final payment due to Bonaire under the agreement and will be paid in cash in late 2007.
Since closing their U.S. operations, Sportingbet has lost approximately 80% of their poker revenues. The company did sell off parts of its U.S. facing as well just before the online gambling bill was signed in the U.S. but retained Paradise Poker which will be marketed toward Canada and other nations, but not accept U.S. players.
Last year, the poker room was expected to generate an operating profit of £60 million, but that expectation has since been lowered to approximately £10 million a year.