Bet365 flops down under

Bet 365 have struggled to be profitable in Australia.

The British gambling operator, Bet365 have reported losses of AUS$40.8 million with their Australia venture.

The loss in its 2014 financials is reportedly the result of their start-up costs.

This latest loss means that the online betting firm have accumulated losses of AUS$77 million since they entered the Australian market just over two years ago. Indeed, in 2013, Bet365 recorded a loss of AUS$36.2 million.

The British firm are based in Darwin, and has been operating in the country since 2012, after receiving an Australian licence in 2011.

The parent company in the UK has continued to prop up the Australian subsidiary, with loans that do not require repayment until the firm begins to turn over a profit.

The Australian branch of the firm has reported growth despite the financial loss. In the twelve months ended March 31 2014, the company grew by 278 per cent to AUS$29.1 million – which is a significant improvement on the AUS$7.7 million of the year before this.

In its latest report, the Australian offshoot also reports that its player’s base has grown significantly. It has increased by 83 per cent at 73,000 actives, who placed AUS$1.5 billion in bets. Of these bets wagered, AUS$447 million (or 30 per cent of turnover), were generated from mobile devices.

The Sydney Morning Herald reports that this suggests Bet365’s market share has grown to command approximately 11 per cent of the AUS$13 billion online betting industry in the country.

One reason for the huge loss, however, is that the firm have incurred significant staffing costs. The company employs 210 people, and wage costs have shot up 63 per cent to AUS$19.9 million over the last year since 2013.

The firm also incurred huge costs in advertising and technology, as it sought to build brand awareness among Australia’s population. The company also attempted to ensure that the infrastructure was strong in flexibility and scalability for the future.

The betting company is majority owned and run by Denise Coates, the very private entrepreneur, who is believed to be worth US$1. 6 billion, according to Forbes estimates.

Ms Coates is quite used to plugging holes in loss-making ventures. She is the daughter of businessman Peter Coates, who is the chairman of English football club Stoke City. Bet365 bought Stoke City in 2006 and has sunk £100 million ($182 million) into it. The club experienced losses of £31 million in 2013. This loss was absorbed by the gambling company’s profit before tax of £179 million.