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Administration of the Leisure & Gaming plc and the sale of Betshop Group (Europe) Limited

27 October 2010

This Regulatory News Statement was submitted to the London Stock Exchange on 27 October 2010.

Leisure & Gaming plc

("the Company")

Administration of the Company and the sale of Betshop Group (Europe) Limited

Since the suspension of trading in the shares of the Company on 21 May 2010,the Directors continued to have discussions with their shareholders and received interest from nine potential purchasers for the shares held by the Company in Betshop Group (Europe) Limited ("BSG").  As a result of this sales process, the Company received one firm offer from Grupo Pefaco ("Pefaco"), a Spanish company with operations in Europe, South America and Africa involved in recreational gaming machines. Heads of terms were signed with Pefaco on 28 July 2010 and the offer was detailed in a circular to shareholders dated 10 September 2010 and comprised an initial consideration of €2.3m payable on signing the Sale and Purchase Agreement ("SPA"), repayment of the intercompany account due from BSG of €1.1mand deferred consideration of up to €3m subject to meeting certain turnover targets commencing on 1 August 2010.

The Pefaco offer was put to shareholders at a meeting held on 28 September 2010 however that meeting was adjourned before voting took place to allow time for the SPA to be concluded. Under the timeline set out in the heads of terms with Pefaco, the sale was due to be completed on 29 September 2010 and shareholders were concerned that an SPA was not concluded. The Company did not conclude terms with Pefaco and Pefaco withdrew their offer prior to the adjourned shareholders meeting held on the 12 October 2010.

The loss of the sale to Pefaco was announced to the stock exchange on the 11 and 12 October 2010, as well as being widely covered in the gaming industry press.

On 12 October 2010 specialist restructuring, recovery and insolvency firm, FRP Advisory LLP ("FRP"),on behalf of the Company, contacted 13 potentially interested parties with a deadline to receive indicative funded offers for BSG by 14 October 2010 with a view to completing both due diligence and a transaction during week commencing 18 October 2010.  Separately, five turnaround funds were also contacted. The short timescale to disposal was dictated by the group’s critical cash position that required an injection of circa €3m, which included €1.5m as working capital into BSG, €0.5m into the Company to deal with immediate creditors and €1m to the bank who had issued demand for repayment.  €450k of sports betting losses were incurred in the week ending 17 October 2010, further compounding the cash position in BSG.

Four offers were received for the shares in BSG including the acquisitionof the intercompany loan which at today’s date is €0.9m due from BSG to the Company. This included a materially reduced offer by Pefaco and interest from a significant international gaming operator.

Discussions were held with all parties, one of which was Honeymead Services Limited,a company which is controlled by a syndicate of investors including Gabriel Chaleplis, a director of BSG. Through that process,HoneymeadServices Limited increased theirinitialoffer to €1m payable as to €500k on completion and €500k deferred over 12 months. At the same time, the remaining interested parties withdrew from the bidding process.

In view of the insolvent position of the Company, the directors placed the Company into Administration on 26 October 2010 at 4.36pm and the Joint Administrators, Philip Watkins and Geoff Rowley of FRP Advisory LLP,entered into a share purchase agreement in respect of the sale of the entire shareholding of BSG, including the acquisition by Honeymead Services Limited of the intercompany loan due from BSG which at today’s date is €0.9m to the Company, for €1m. In accordance with the terms of the  share purchase agreement the initial consideration was €500kwith deferred consideration payable in four €125k payments over 12 months. The Joint Administrators have retained security over the BSG shares and debenture security over the UK entities in the BSG group as security for the deferred consideration.

The Joint Administrators were able to facilitate the sale of BSG as a going concern, thereby preserving the business and protecting the jobs of over 600 agents and employees in Italy, Greece, Cyprus and the UK.

For further information, please contact:

FRP Advisory LLP
Philip Watkins and Geoff Rowley - Tel: 0207 467 4005

FinnCap
Geoff Nash and Charlotte Stranner (Corporate Finance) - Tel: 020 7600 1658