|ESI Entertainment Systems Incorporated, the parent firm behind payment processing company Citadel Commerce, has seen its revenues drop by 85 percent following its exit from the US market.|
The Canadian firm has released its financial results revealing that the change forced by the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) has seen its revenues drop from $21.7 million last year to just $3.2 million for the most recent fiscal year.
In addition, its consolidated gross profits fell by 96 percent to just $494,409 from $13.3 million the year before along with a 44 percent increase in consolidated net losses before taxes and interest to $7.1 million from $4.9 million.
“ESI's revenues, which had increased during fiscal 2006 and 2007, were reduced significantly during fiscal 2008 consequent upon the cessation by Citadel of financial processing to the non-domestic Internet gaming merchants for US-based consumers,” read a statement from ESI.
“As of January 17, 2007, the company ceased its financial processing business for non-domestic Internet gaming merchants for US consumers. This has had a significant material impact on the revenues for Citadel in fiscal 2008 since 97 percent of the revenues generated by Citadel were from that marketplace.”
However, the Burnaby-based firm stated that revenues from its ESI Integrity subsidiary, although substantially smaller than those of Citadel in prior years, have continued to grow in the past three years. It announced that this was due to increased sales and marketing efforts along with stronger brand recognition with the number of installations for government lotteries and pari-mutuel organisations increasing worldwide.
“Additionally, the company's costs were impacted by the legal and auditing costs associated with negotiations with the Office of the United States District Attorney for the Southern District of New York in relation to the investigations being carried out by the Department of Justice into Internet gaming merchants,” read the statement from ESI.