Opinion: Before the leaves are brown...
Despite the expected summer slowdown in financial and corporate activity elsewhere in the market, July and August 2009 have been heavy on egaming news, with expected industry consolidation, further US settlements and even possible US regulation movements still on the cards before autumn, argues James Hollins of brokerage Daniel Stewart.
DESPITE the expected summer slowdown in financial and corporate activity elsewhere in the market, July and August 2009 have shaped up to be heavy on news flow in the online gaming sector, with expected industry consolidation, further US settlements and even possible US regulation movements.
PartyGaming bought Cashcade after being rumoured to be leading the way in industry consolidation, with a likely acquisitive move into developing its bingo and/or sportsbook capabilities The deal seems sensible, in my opinion, as it would provide strong bingo functionality, improving both earnings momentum and business-to-business opportunities.
Industry consolidation among the key listed operators has yet to begin in earnest, but may be reignited following expected US settlements yet to be concluded by key companies such as Sportingbet and 888.
We at Daniel Stewart expect a successful conclusion to negotiations with the US authorities and this could launch a flurry of activity, with Sportingbet looking particularly attractive to sector peer Bwin, or even PartyGaming as it is looking to boost its sports product. Sportingbet’s European and Australian sportsbook brands and risk management are highly valuable, with massive potential cost synergies accruing from a combination with an online peer.
We also expect interesting developments in the US, with a proposed hearing of Barney Frank’s IGRA Bill at the end of summer 2009, as well as continued development of intra-state online gaming regulations in both California and Florida.