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Playtech to buy bwin.party and other fanciful stuff

8th January 2015 10:11 am GMT
Consolidation and regulation will continue to dominate the headlines in 2015. Here is some crystal ball gazing assisted by the usual informed sources.Playtech acquires bwin.partyThere was one name conspicuously absent from last year’s list of high-profile consolidators: Playtech. This is out of character. Look at a list of some of the companies it has acquired or part-acquired thus far: Tribeca, William Hill Online, GTS, Virtue Fusion, PTTS, Mobenga and Geneity. Playtech has built itself by acquisition and it is the first of those acquisitions that might hold the key to Playtech’s plans for bwin.party. Playtech went public in March 2006. In October, UIGEA went through and Playtech lost 40 per cent of its revenues by retreating from the US. It reacted immediately by buying Tribeca but the software was never used. Playtech migrated licensees such as VCPoker, Paddy Power Poker and Blue Square Poker onto the iPoker Network and it gained a critical mass of liquidity almost overnight. Despite its depressingly downward trajectory, bwin.party still has around a million unique active customers each quarter. It has failed to find an efficient way of managing its many moving parts but it is still a viable business. It would be a big project but Playtech is perhaps the only company capable of righting the bwin.party ship. Playtech is a master of reviving fallen giants (think Gala Coral, Betclic Everest, Ladbrokes and more) and there is no reason why the challenge of bwin.party would be beyond it. If it can succeed in France with Betclic, which has been beyond the abilities of most operators, then perhaps it can even make it in Germany (and elsewhere) with bwin. Pooling the iPoker and Party liquidity is a tantalising prospect (although we’re not sure how regulators in the US would react) - it would create a clear number two in the poker market. Falling casino revenues would also be a thing of the past with Playtech’s software running things. Besides, even a cursory look at the smoke signals (such as the recent bond issue) suggests Playtech is planning something big. It has around €700m burning a hole in its pocket before we even begin to think about other financing. There is not much else out there of that size unless Playtech is going to buy a Gala Coral or a Ladbrokes, which has been suggested, but frankly, we think they would be mad to go into the UK land-based market during election year. Messrs Sagi, Weizer, Levy and co are anything but mad. One last clue? bwin.party’s employees are expecting it to happen. And the last time I ignored that particular smoke signal, Amaya bought PokerStars. Playtech likes to announce big things at ICE. We don’t have long to wait.Political woesSpeaking of the UK elections, the Campaign for Fairer Gambling fired the first shot in its dirty war against fixed odds betting machines on January 2nd in UK newspaper The Guardian, which continually peddles leftist arguments against gambling despite launching its own GoWager sports betting site last year. The article itself is little more than ‘Man loses money on betting machine shocker’ - but the Campaign head honcho Derek Webb is a big donor to the Liberal Democrats and has made great inroads into the Labour Party, which has adopted his line against FOBTs. There is some evidence that the Campaign’s £2 stake solution would be no solution but the rest of the research is somewhat inconclusive on the impact of the machines.It seems unbelievable that politicians would get involved in this debate. I used to work in a liquor store and most of the alcoholics bought two bottles of VP Sherry, two bottles of medium sweet cider or a can of Tennants Super. Much as you can’t cure alcoholics by banning VP Sherry, medium sweet cider or Tennants Super, you will not cure problem gamblers by banning FOBTs. Despite this seemingly obvious point and despite the fact that bookmakers are doing their best to address the issue of problem gambling, they still need to do better. The issue of FOBTs is not going to go away during election year. Gambling is becoming more and more of a dirty word in many circles. The industry needs to change this narrative before it is too late.Stateside stasisAnd over the pond? This is the easiest prediction. Nothing is going to happen in 2015. Nope, don’t expect California to regulate. Is there nobody else that thinks that PokerStars’ Californian alliance is looking just a wee bit like Playtech’s ill-fated COPA alliance? Way back in 2011, Playtech and Scientific Games launched a freeplay site for the California Online Poker Association (COPA), which was a grouping of 29 California tribal governments and 31 California-licensed card clubs including the likes of the Morongo Band of Mission Indians, the San Manuel Band of Mission Indians, the Commerce Club, the Hawaiian Gardens Casino and the Bicycle Casino. COPA was hugely divisive. It was lobbying for an online poker monopoly. It split a year later. Having spent almost $1m on the venture, Playtech vowed never to return (for the foreseeable future). Fast forward three years and PokerStars has an alliance with the Morongo Band of Mission Indians, San Manuel Band of Mission Indians and California’s three largest card clubs, the Commerce Club, the Hawaiian Gardens Casino and the Bicycle Casino. Is this sounding familiar? To be fair, the Morongos and friends are not pushing for a monopoly this time round but they are still lining up against those that continue to peddle legislation with bad actor clauses. One of the most vociferous of these has been the California Tribal Business Alliance, for example, whose members include the Pala Band of Mission Indians. Its Pala Interactive arm is led by one Jim Ryan, who has spent huge swathes of his career lobbying against PokerStars. Other tribes are aligned with bwin.party, GTECH and others. There are too many competing teams trying to top the league before the league is even established. Elsewhere, Pennsylvania and Connecticut seem the most likely movers on online gaming but don’t hold your breath. Perhaps something leftfield will emerge from one of the Southern states but the most likely change will be an acceptance of Fantasy Sports with pooled cash prizes. That is where all the action is right now.Europe’s regulated marketsEnough of things that will not happen and on to things that will. Sweden, believe it or not, will move on with legislation for a liberalised online gaming market. I am not quite ready to predict it will pass legislation, after all, it has been promising to do this for around eight years. But don’t rule it out. The politicians are aligned. There should not be too much bickering over terms and conditions (ha!). That is not the case in Switzerland, which might well pass online gaming legislation, but is extremely unlikely to open it up to foreign operators. But hey, that’s just a CHF300m (€250m) market. But what you really want to know about is France and Germany, right? Well, German chaos will continue for some time yet. France will likely renew its online licences with no change to the Ts and Cs. Sorry. Oh, and the newly relaunched UK market will be an almighty bunfight. That is going to be fun. What else? BitCoin? GoCoin CEO Steve Beauregard recently predicted that in January 2015, the first licensed online casino will accept player deposits utilizing the Bitcoin network. That sounds a bit too specific to be anything other than insider knowledge to me. So, let’s take his word for it. It will be an Isle of Man-based operator. PokerStars maybe? Maybe… Speaking of PokerStars, it will launch in New Jersey. It will not launch sports betting. PokerStars is a beautiful operator once it gets going. But it takes a while to get things off the ground. Take, for example, New Jersey. Its casino rollout has been fairly slow too and sports betting is a complicated beast. But it will get there in the end, just not in 2015. Beauregard’s other predictions were fanciful by the way. One hundred iGaming sites turning on cryptocurrency payments? Maybe but not ones that you or I would be happy playing on. He also reckons five more US states will regulate online gambling. No, they won’t. As previously discussed. He even reckons the first US real money operator will turn on cryptocurrency payments in Q3 of 2015. That sounds like insider knowledge too. It also sounds a complete fantasy, so perhaps his first prediction was off the mark too. US regulators are far too cautious of new technologies to go anywhere near BitCoin just yet. Still, Beauregard is probably a multimillionaire and I, most certainly, am not. So who do you believe?sah@gamingintelligence.com
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