The UK's biggest operator of machines in pubs was the pubs division of Inspired Gaming Group. Now it is Gamestec, once the number two in terms of size. This follows the sale of Inspired's pub operation to Gamestec, announced yesterday.

It is not known how many AWPs are involved or the total number of machines of all types in the sale, but prior to the transfer, Inspired had been understood to have around 100,000 pieces of equipment in operation and Gamestec about 40,000.

Much of the Inspired operation was in pubs, but there was also a significant number of machines operated in clubs and seaside locations such as holiday camps.

The pubs division at Inspired was acquired by RLMS Acquisitions a subsidiary of Danoptra Holdings, the parent company of Gamestec.

As part of the deal, Gamestec has signed a three-year exclusive partnership for Inspired to supply Gamestec with its Open server-based gaming platform.

A total of £80m in convertible preference shares is being placed to raise £40m to fund Inspired’s exit from the pubs division.

Inspired had threatened to leave the operation of machines in pubs some time ago, citing squeezed margins and the general downturn in the pubs trade.

Yesterday’s move will still come as a shock to pub retailers, the primary beneficiaries of machine income.

For Inspired, said its joint CEOs Luke Alvarez and Norman Crowley, the sale "transforms Inspired into a pure-play gaming participation business, now active only in growing segments with attractive unit economics and no legacy assets."

The company will now concentrate on its pioneering work in server-based gaming, selling the technology to operators in the UK and overseas, and on its involvement in betting, casinos, bingo and leisure with SBG.

The sale of the pubs division for a nominal consideration on a cash free/debt free basis and the assumption of certain liabilities, will results in the closure of the depot network at an estimated total cash cost to Inspired of £20m.

Its deal with Gamestec on server-based gaming will also include the transfer of 8,000 digital machines from its operation already
working on the SBG platform.

Inspired will now benefit from considerable fees income from the use of its platform by Gamestec.

At the same time as the announcement of the deal with Gamestec, Inspired released its results for the 28-week period ended April 12, 2008. They showed an operating profit of £4.5m (compared with £2.2m. in 2007) and profit before tax of £0.5m (2007: loss of £2m.).

Server-based gaming turnover was £18.6m, which was 45.6 per cent of total turnover of £40.8m (2007: £17.5m, 39.6 per cent of total).

Net debt at April 12 was £77.5m, up from £59.2m at the end of the 2007 financial year. The operating loss (principally the pubs division) was £11.5m (2007: loss £1.3m).

The deal with Gamestec means that a total of 23,600 machines are now connected to the Inspired Open SBG platform.