Empire said that in the light of regulatory risks it would "fully review carefully all uses for the company's surplus capital in order to maximise shareholder value". It is believed to be considering spinning off a separate vehicle that would target investments in industries less risky than online gambling, such as a tractor business in India.
Aim-listed Empire specialises in recruiting punters through its "skin" websites which use gaming services of operating groups. A contract dispute over how much the "skin" website group should be paid by PartyGaming resulted in a $250m settlement for Empire in February - cash the group earmarked for an acquisition.
Yesterday Mr Lanir told analysts that the online gambling sector, despite heavy share losses and high levels of cash generation, remained overvalued. He said the sector should be trading on between three and six times earnings because of the growing shadow cast by US regulators. PartyGaming is valued at about 9.5 times earnings, 888 at 8.7 times and Sportingbet at 6.7 times. Empire is trading at a small premium to the value of its cash.
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