The ongoing saga of Ongame takes a twist or two5th July 2012 6:24 am GMT
Talk of the town last week was undoubtedly Shuffle Master’s decision to pull the plug on the Ongame deal. This week it’s Ray Bitar’s arrest, which we’ll look at elsewhere, and Zynga’s supposed interest in Ongame. Zynga has been looking at every available online gaming asset including Full Tilt so I have no reason to think it has not had a look at Ongame. But it does seem remarkably convenient that this story should leak out now - just as Shuffle Master’s exit threatens to send the price shooting through the floor. Obviously Ongame is pretty cheap and significantly less complicated than Full Tilt but that does not make it an obvious buy. After all, there were reasons that Shuffle Master pulled the plug. I’m sure I read somewhere that this was supposed to be a mutual decision by Shuffle and bwin.party although the official explanation that Ongame was unlikely to deliver the short-term results expected of it hardly suggested a mutual decision. And, of course, there is the fact that absolutely nobody believes the official explanation. The party line claimed business conditions in Europe have “deteriorated” since the agreement was signed in February, which is true of course, but only a fool would not have anticipated that. The Eurozone crisis was in full swing back then. The final terms of the Greek bailout were being agreed and the European Commission dropped its growth forecasts for the year and predicted recession. It is possible the Spanish tax grab spooked Shuffle Master’s accountants. After all, if a supposedly friendly European government can spring a multi-million Euro surprise like that then what will the bad guys do?Speaking of which, the decidedly industry-unfriendly Germans have moved inexorably towards a state treaty where any hope of legal online poker will be as distant a dream as it is in the US. Maybe Shuffle Master has discovered something that makes that distant dream seem even less likely but the US market was always a long-term hope and should never have been factored into any spreadsheets. All these things are possible explanations but they could have been explained more explicitly if true. The gossips believe something nasty must have been found in the regulatory make-up of Ongame but this seems ill-informed. I almost felt it unnecessary to call the spokesperson to vigorously deny this. But I did. And he did. It is possible that Shuffle Master just realised that Ongame operates in far more grey markets than it was happy with. Despite often claiming to be whiter than white, it still operates in Germany and Norway, for example. There is another curveball that has been thrown in recent weeks that could have given Shuffle Master the heebie-jeebies. PokerStars’ potential acquisition of Full Tilt is likely to spike anyone’s hopes for a profitable poker business. If Ongame is struggling for post-bwin momentum, and the departure of Bet24 to Unibet’s poker provider Microgaming should be seen more as signifier rather than significant, then that may have made Shuffle think twice. Certainly, the books were a mess of estimates and predictions as Ongame was not accounted for separately while part of bwin. It is fairly likely that recent results may not have measured up to those predictions. The most likely explanation for Shuffle Master’s exit is a combination of all of the above, which just made executives stop and think for a moment: “Just what the hell are we getting for nearly €30m?” That doesn’t bode well for the price that bwin.party will end up getting. Sources claim the books are in order now and a sale should happen more quickly but the price will be going down as we speak. Zynga could afford it, and it makes strategic sense, but it seems unlikely. They could have easily outbid Shuffle before now and the strategic rationale is no stronger now than it was in February. Meanwhile, Aristocrat and Bally’s preferred online poker solution is in the balance. Shuffle Master brokered the deal between Ongame and the two US suppliers but would not be the key partner. In the meantime, Bally has gone live with its first online client in the shape of the Golden Nugget casino. It is understood to be using Winamax for that purpose. Winamax was founded by Bally’s newly-acquired online guru Alex Dreyfus. Its website is hosted in Malta with servers in France. Not quite “US-based” as it claims on GoldenNuggetPoker.com but the Golden Nugget casinos are and Bally is, so who’s complaining?!