Exclusive: bgo Entertainment prepares £50m Costa Bingo sale

Three companies have lodged a firm interest in bidding for Costa Bingo with financial advisers New Shore Partners appointed to manage a sale worth up to £50m, eGaming Review can exclusively reveal.

bgo Entertainment, formerly Mandalay Media, has hired New Shore that includes the same individuals that negotiated the £97m sale of Cashcade to PartyGaming, now bwin.party, in July 2009. A sale document is known to have been seen and NDAs signed by three potential bidders for the highly profitable three year-old business.

The companies in question are known to include some of the biggest operators and suppliers in online gaming with two lodging official bids and the other party known to be close to doing the same. eGR understands that Ladbrokes and bwin.party had expressed an initial interest but have since withdrawn from the process.

eGR has also learned that social gaming business Zynga has also withdrawn from the bidding after showing an early interest in examining the Costa prospectus.

As exclusively reported by eGR earlier this year Zynga weighed up an offer for bwin.party-owned poker network Ongame before rapidly withdrawing its interest and pursuing other avenues including signing a real-money casino and poker B2B agreement with the Party Poker operator on 24 October.

bgo is said to be still unsure as to whether or not they will sell or invest further capital into the £14m a year net gaming revenue generating business. They are, however known to be keen to receive further interest before making a final decision.

Costa, on the Dragonfish network, has rapidly emerged as one of the leading brands in the sector claiming more than 10% of UK bingo market share. Gala Bingo, Gamesys’s JackpotJoy and Tombola are thought to be marginally ahead of Costa.

It was one of the first sites to offer free games when it was launched in June 2009 giving away up to £50 every 15 minutes in order to tempt players into re-depositing, and has since developed one of the most loyal player bases in bingo, according to numerous affiliates. It is also the biggest site in terms of bingo tickets purchased and is thought to have the largest number of active players on its site.

Costa is based in Gibraltar and employs 10 developers, designers and marketers with the site’s 100 or more chat hosts outsourced to 888’s Dragonfish.

At the beginning of October eGR exclusively revealed the company relaunched Xbingo as bgo.com with the founders keen to extend their gaming portfolio from initially offering casino and bingo to sports betting and lottery products by the end of the year.

XBingo’s players, which only launched last summer using bgo’s own software, have been migrated to the new site. The company has an existing Isle of Man licence, however it has also been approved for a second licence in Alderney as a result of its expanded offering.