bwin.party closes in on US strategic partnership
Newly merged operator close to signing US tie-up ahead of online poker being regulated "in the near term".
Bwin.party is finalising agreements with partners at federal and state level in California and New Jersey ahead of online poker being regulated “in the near term.”
Co-CEO Jim Ryan said following the group’s first-half results presentation this morning: “We have made the decision to target strategic partners. At federal level, we are finalising agreements with a couple of parties positioned nicely to operate in that market. In California, we are well advanced with a particular party. The same in New Jersey, consistent with where we are at a federal level.”
Ryan added that the group’s poker brands – PartyPoker, WPT, Poker Room, and subscription brand Club WPT “ were also best positioned to benefit from the likely exclusion from the market of the leading US-facing poker brands following the Black Friday indictments, citing a recently commissioned brand awareness survey.
“The real impact of Black Friday is to draw a red line through sites we don’t believe will be able to have a chance to enter that market, the No 1 and 2 players and Ultimate Bet and Absolute poker. So where does that position us? Numbers 1, 3, 5, 6, 9,” said Ryan.
Ryan also stated in response to a question from analyst Vaughan Lewis of JP Morgan that bwin.party was not among those looking at acquiring the assets of Full Tilt: “We are not looking at the business and have no plans of looking at it,” said Ryan.
Bwin.party co-CEO Ryan was speaking after the newly merged group unveiled pro-forma income of 81.9m, 21% down on the group’s combined clean EBITDA of 104.1m in the same period last year, but ahead of the majority of analysts’ estimates. Higher marketing costs and taxes associated with launching in regulated markets were blamed for the fall.
Revenues dropped to 410.1m from 398m in the six months to 30 June 2011, due to increased competition in poker, the closure of French casino ahead of the market opening for sports and poker there last year, and tough comparatives presented by last summer’s football World Cup.
More positive news for investors came in the form of Ryan’s announcement that the merger was expected to realise higher-than-expected cost savings. “Having had the opportunity since the deal closed to review all of the synergy projects…We anticipate we’ll have over 40m of synergies delivered in 2012 and we’ve upped our estimate for 2013 to 65m. That’s up by 10m,” said Ryan.
The disposal of the Ongame poker platform and network, officially put up for sale on 30 June and classified as discontinued operations, remained “on track” to complete by the end of 2011, said the group. Ongame however accrued a loss of 9.5m euros in the six months to 30 June, with the company announcing its intention to migrate its bwin poker player base to the PartyPoker platform “as soon as practicable”. All remaining dot.com, dot.fr, and dot.it players are expected to be migrated by the end of the third quarter of 2012, said the company.
The disposal as planned by the end of 2011 would see the company pay transitionary royalties to the new owner for acting as a service provider to the bwin B2C business during this time, “expected to disappear when we move onto the PartyPoker platform” said CFO Martin Weigold this morning.
Casino was however the only product vertical to demonstrate growth in the half, pro-forma revenues climbing 2%. Sports was down 2%, “mainly driven by the fact that we had a World Cup year last year”, said Ryan. Poker revenues were down approximately 10%, with this downward trend pronounced “especially on the dot com world” said Ryan, who added that this had been offset by “good progress in Italy and France where we are having market shares of 17% and 19%”.
Bingo was flat, but had fallen 16% quarter on quarter, which Weigold said in the analysts’ Q&A demonstrated the seasonal affect of moving from Q1 to Q2, plus “UK competition, resulting in having to increase our bonus rates. They went up year on year. In addition to that, Italy, we were first into the market, with Gioco Digitale, and over time, new entrants came in and eroded some of the first-mover share.”