Camilo Thame, Business Reporter

Brian George, chief executive officer of Supreme Ventures Limited. - File

Supreme Ventures Limited has secured a deal with its technology partner GTech and Guatemalan firm Supreme Gaming Limited, a first step in its thrust into the Central American market, which the local lottery and gaming company anticipates will add $600 million annually to its bottom line.

At the same time, the renegotiated agreement with GTech, which takes effect March 1 2007, should save the company around $400 million annually or 33 per cent - according to Wednesday Business estimates - on the service contractors fees, which have been running at around $1.2 billion a year for the last two years.

Fees lowered

Chief executive officer of SVL, Brain George, said the fees were lowered from "between nine and 10 per cent to around six per cent" of gross online sales.

SVL actually forked out $1.29 billion in service contractors fees on $13.59 billion in lottery sales. And, should lottery sales even match last year's intake, the lottery company stands to save $480 million.

Under the Guatemala deal which was signed in July, Supreme Gaming will operate an online gaming company under Supreme Ventures' franchise, which by itself is expected to bring in $250 million in franchise fees, over the three years 2007-2009.

"Supreme Gaming Limited (which has a franchise agreement relationship with Supreme Ventures Limited) and our technology provider recently signed the agreement for lottery operations in Guatemala," said the local firm in a note to its shareholders.

Anticipates two per cent gain

"Supreme Ventures Limited anticipates a gain of two per cent on gross online sales in franchise fees from these operations, conservatively estimated at $250 million over the period 2007 to 2009."

George, told Wednesday Business in an interview yesterday that the estimated earnings should go straight to the bottom line "because it is a franchise operation," he said. "We will not have any expenses."

The online gaming operation is scheduled to start February 15, 2006.

Importantly, when ongoing negotiations taking place in El Salvador, Nicaragua and Costa Rica yield agreements, Central America overall is expected to bring in $600 million annually within a few years.

"When fully ramped up, all the operations in Central America should bring in fees of $600 million annually," George said, providing conservative estimates in light of what he described as "optimistic projections" made earlier in the year when the company listed on the Jamaica Stock Exchange.

In January, when the company was making its initial public offering, it had projected in its prospectus to investors that its net profit of $206 million from revenues of $14.4 billion for the year to October 31, 2005, would grow to $1.95 billion by the year ending October 31, 2008, from revenues of $23.3 billion.

For the nine months to July 31, 2006, SVL made a net profit of $129 million from $12 billion in revenue, up from $19.9 million net profit on $11.1 billion in sales during the comparative period last year.

Profit and revenue growth

The profit and revenue growth was in large part to come from the company's expansion of its video lottery terminal (VLT) operations, which was projected to draw in revenue of $4.7 billion by 2008, up from what was expected to be $1.27 billion in 2006.

However, those plans included the establishment of a VLT gaming facility at Caymanas Park. The VLT plans were included in the Caymanas Entertainment Limited's bid for Caymanas Park, a consortium in which SVL has a 25 per cent stake. Though CEL had been advised by the National Investment Bank of Jamaica that it had received the highest score of the bids submitted, a decision on the divestment is still pending. And, SVL has also pulled back on plans to start operations in Trinidad.

"Because of some of the setbacks in Jamaica, we are focusing on consolidating here first," George said. "The construction in Trinidad has been delayed. Additionally, the regulations in Trinidad do not have well-defined rules on slot machines ... They operate private members club there. A review of those regulations is expected, so we hope to see government decision before we proceed."

George says his firm is still pursuing the "ability to sell U.S. power ball tickets in Jamaica."

camilo.thame@gleanerjm.com