SOURCE: timesonline.co.uk

888 Holdings, the online gaming group that was until recently a takeover target, is looking for acquisitions to offset the effects of America's ban on online gambling.

“We will definitely be looking to grow with acquisitions and not just organically," Gigi Levy, the chief executive, said this morning as he unveiled full-year results way ahead of forecasts.

Until last month the group was in long-running takeover talks with Ladbrokes, the bookmakers, which was exploring buying the internet gaming company.

Mr. Levy's comments came as 888 posted a 34 percent increase in full-year pre-tax profits, to $91 million (£46 million), beating analyst forecasts despite more than half its business being ruled illegal in the U.S. in the fourth quarter.

Analysts had expected pre-tax profits of between $58 million and $76 million for the years ending December 31. Shares in the group rose by nearly 5 percent in morning deals valuing the company at about £425 million.

888 was among those hit hard by the Unlawful Internet Gambling Enforcement Act in the U.S. Passed on September 29, the legislation effectively made online gambling illegal in the U.S. by outlawing the processing of related transactions.

The U.S. online gaming market, previously the world’s largest, accounted for 55 percent of 888’s business.

Since then the company has targeted online bingo, through the $32 million acquisition of privately-owned Globalcom's bingo unit. The deal was designed to attract female customers less likely to play games such as poker and blackjack.

Net gaming revenues grew 7 percent to $290 million. The figure included a 28 percent rise in net gaming revenues from continuing operations to $157 million from $123 million in the same period a year earlier.

The company added that net gaming revenues for the first quarter of this year grew by 16 percent, on the final quarter of 2006, boosted by the rollout of new games. It said it expected future growth to be boosted by its bingo acquisition.

Gigi Levy, the chief executive, said: “Given this start to 2007, the release of new products, our Bingo acquisition and our clear business strategy, we are confident of delivering future growth in 2007.”

The company recommended a final dividend of 8.88 cents per share.

The first step towards a possible repeal of America’s internet gambling ban was taken last week when the Democrat chairman of the House Committee on Financial Services introduced a Bill to exempt properly licensed operators.

Congressman Barney Frank, who recently described the ban as one of the “stupidest laws” ever passed, launched the Internet Gambling Regulation and Enforcement Act 2007 to establish a regulatory framework for the licensing of operators to accept bets and wagers.

Mr. Frank said: “The existing legislation is an inappropriate interference on the personal freedom of Americans and this interference should be undone.”

However, analysts have commented that any rule changes are likely to favour U.S. companies, at the expense of foreign competitors.