(Bloomberg) –888 Holdings Plc posted a 5.3 percent decline in first-half profit as costs increased for marketing U.S. online poker and said Chief Executive Officer Brian Mattingley will step up to replace Richard Kilsby as chairman.

Kilsby will retire as non-executive chairman at next year’s annual shareholder meeting, while Mattingley will swap his role for that of executive chairman, the Gibraltar-based online gambling company said in a statement today.

“The management is unchanged and the continuity of responsibilities is there,” Mattingley said by phone. “At this moment, there is no need to have an executive CEO because we have an executive chairman.”

Operating expenses rose 19 percent to $65 million. 888 booked losses of $4.4 million due to marketing costs of All American Poker in New Jersey, its joint venture with Avenue Capital Group. It also said AAPN’s trading had been slower than expected, due to technical issues around geo-location, electronic payments and a general unawareness of legal online gaming.

888, which provides casino, poker and bingo games, saw net income fall to $30.4 million on a stronger British pound and euro, while revenue rose 12 percent to $225.1 million in the six months ended June 30, compared with a year earlier.

The stock fell 1.9 percent to 128 pence at 1:56 p.m. in London, taking the decline to 25 percent this year and giving the company a market value of 453 million pounds ($752 million).

Slow Start

“Profits were down slightly but some of that might reverse in the second half,” said Nicholas Batram, an analyst at Peel Hunt with a hold rating on the stock.

Online gambling’s slow start in New Jersey, the most- populous U.S. state to legalize Internet bets, has casinos reassessing their marketing to would-be players. AAPN is refining its marketing approach to better exploit the customer opportunity using the 888 brand, which was unknown in the market, but is building traction, the company said today.

888 also said that Chief Operating Officer Itai Frieberger will join the board from January. The company is preparing for the introduction of the point of consumption tax on Dec. 1, a levy on online gambling activities of all U.K. based customers.

“We are taking steps to mitigate some of that tax burden but come what may we will be hit,” Mattingley said.

Replies:

No replies were posted for this topic.