Review of the Year: bwin and PartyGaming merge
eGR looks at the 10 biggest talking points of 2011.
The industry’s biggest ever merger was completed in March this year, but the new entity’s first nine months have not been easy. Just days after the business began trading its share price fell 30% in the 48 hours following an unworkable and seemingly anti-EU sports betting proposal by 15 out of 16 of Germany’s Lander to tax private operators 16.6% of their turnover.
At this stage, much of bwin.party’s short-term success depends on developments in regulatory markets, as the drop in share price following the German proposals showed. Much hinges on a meeting of the German Länder on 16 December, where they will debate the already renegotiated proposals, but without the involvement of Schleswig-Holstein, the only state to put forward an EU-approved proposal that would tax operators 20% of GPT and allow all products and an unlimited number of licences.
Bwin could also run into difficulties in Belgium if the Belgian Gaming Commission goes ahead with plans to draw up a blacklist of unlicensed operators, which would be likely include the company, cutting off its player base in the market. However, bwin is going ahead with plans to launch in Denmark and Spain, and remains confident of being among the first wave of licensees in both markets.
The company has also positioned itself for entry into the US should regulation be introduced. The deals with Boyd Gaming and MGM Resorts will see the formation of a new company to launch PartyPoker and WPT brands in the US, and a 15-year joint venture for bwin.party to supply its poker platform to each company for poker offerings under their own brands.
Despite a lot hinging on regulatory developments, this is a transitional 12 months for bwin.party, as it works its way through the merger process to achieve the synergies promised by co-CEO Jim Ryan. In its year-end figures it claimed to be on course to deliver synergies of 40m in 2012, and 65m in 2013. Revenues are rising steadily, up 9% year-on-year in Q3 2011, with a further 8 to 9% growth in Q4 according to Barclay’s Capital.
The only major continuing hiccup for bwin.party is its inability to kick-start its poker offering, which continues to decline year-on-year, prompting group CFO Martin Weigold to admit that the company “really need[s] something to happen to PokerStars” to help return poker to growth. The sale of poker network Ongame also continues to present a problem, with the company now admitting that it will not be sold before the end of the year as previously promised.
The key issues bwin and PartyGaming faced in their first year as one company:
bwin.party down sharply on back of German sports betting proposal
bwin.party confirms Ongame sale plans
bwin.party inks US agreements with MGM and Boyd
Ryan: US deal covers all possibilities
We really need to see something happen to PokerStars, admits bwin.party CFO