Industry News

Poker Business Down for Bookies
Annual reports released in the last month by bookmakers and poker room operators Paddy Power, Blue Square, and Ladbrokes indicate the competitive environment continues to cause difficulties for the companies' poker offerings.

While the Irish bookie said simply it experienced "gaming gross win growth, notwithstanding poker challenges," Blue Square was less opaque stating "our poker product lost ground on its performance in 2006 as a result of the requirement to move from the Tribeca to the Playtech operating platforms."

Rank, owner of Blue Square, went on to report one buoyant area of its poker business, namely the Grosvenor UK Poker Tour which comprised 11 tournaments, hosted by Grosvenor and G Casinos in Britain. Total player registrations exceeded 3,000 with a total prize pool of £3.2 million generated.

The tournaments were broadcast on Channel 4 television between September and December 2007, attracting average weekly audiences of 205,000. The company said viewing figures for the grand finale of 320,000 represents the biggest audience for a poker competition ever held in the UK.

Ladbrokes meanwhile saw poker profit fall as well. "The competitive landscape remains tough for poker with high customer acquisition costs and margins squeezed by rakeback and other promotional offers," the company said.

"Unique active players across our range of products increased 9.4 percent to 601,000. The acquisition of Sponsio, our Nordic marketing partner, in January 2007 helped us to increase our profit conversion from 33 percent of net gaming revenue in 2006 to 38.3 percent in 2007.

"Poker net revenue declined by 11.4 percent to £31 million, impacted by increased competition in our key European markets. Unique active players for the year were down 1.9 percent at 151,000 and yield per unique active player was down 9.7 percent to £205.

Party Gaming Begins Post-UIGEA Rebound
Party Gaming's 2007 results saw adjusted net revenue up 41 percent to $457.8 million from $325 million in 2006. Party's performance, while still significantly impacted by the Unlawful Internet Gambling Enforcement Act (total unadjusted revenue was down 57 percent from $1.1 billion in 2006), the company's non-U.S. business flourished with casino and sportsbook performing particularly well.

Poker remained the dominant revenue driver, up 10 percent to $295.0 million from $268.4 million in 2006). The company described this performance as "strong" given that "a number of factors that impeded growth during the year. These included the migration of a number of high value players to competitor sites that continue to accept players based in the U.S., strong cross-selling of the Group's other gaming products to its poker customers, which consequently reduces the amount of time they spend on poker, as well as the Group's decision to cease taking bets from customers in certain jurisdictions following regulatory developments in those markets."

The casino business expanded rapidly, up 188 percent to $146.7 million from $51 million at the end of 2006. This growth was assisted by the acquisition of casino assets in January 2007 as well as a substantial improvement in the quality of the Group's PartyCasino software.

Sports betting also grew strongly in 2007, also up 188 percent to $16.1 million in 2007 from $5.6 million a year previously.

The number of players at the site also expanded strongly. Total unique active players for the year to Dec. 31, 2007 jumped 53 percent to 1.1 million while the average number of daily players increasing by 67 percent to nearly 78,000.

Deposit Concerns as Microgaming Drops 30 Skins
Microgaming, home of Unibet and Intertops Poker, has terminated its license with Tusk Investment Corporation and with it the 30 skins managed by the corporation.

Microgaming said it was as much in the dark about the future of player deposits as the players themselves. "Players are understandably experiencing frustration with the lack of information about their accounts with Tusk. Microgaming has unfortunately not heard anything further from Tusk itself, and has yet to be advised of the details of the appointment of a liquidator for Tusk. Until a liquidator advises on Tusk's financial position and ability to pay players and to pay Tusk's white labels and affiliates, Microgaming is unable to assess the situation."

The full list of poker rooms affected is: Battlefield Poker, Royal Card Club, Red Nines, Arctic Poker, Raw Poker, Poker.ie, Daily Poker, Flush Draw Poker, Will Bet Poker, Bet Road Poker, Grand Central Poker, Off The Rail Poker, Privy Poker, Berserk Poker, Atomik Poker, Dave's Poker Room, Hetman Poker, Hot Pepper Poker, Poker Seas, TilttAA Poker, Loose Games Poker, CPT Gaming Poker, Ice Bear Poker, GoHard Poker, Caya Poker, Mr Urban Poker, Poker Sweden, Euro Poker Dream.

"No Future in Monopolies" Says EU
The European Commission, the executive branch of the European Union, has requested the Netherlands and Greece remove gaming restrictions which were found inconsistent with European law.

The European Gaming & Betting Association, which includes PartyGaming, Unibet, Expekt, and Bwin, welcomed the move. Secretary general Sigrid Ligné said, "[The] reasoned opinions send a clear signal that national gaming legislation, which does not serve any genuine consumer protection or public order interest, has no future. Leading European online operators are now calling on Greece and the Netherlands to implement sustainable reforms that will guarantee a fair, open, and regulated market access.

The move comes as Dutch authorities ready to issue a three-year exclusive online gaming license to state-run Holland Casinos, while the Greek monopoly OPAP continues to maximise profits by expanding beyond Greek borders while simultaneously restricting the activity of competitors in Greece.

EU Blocks French UIGEA
The European Union has stepped in to prevent France from adopting a decree similar to the Unlawful Internet Gambling Enforcement Act in the U.S. Had the draft decree been adopted in early March it would have obliged French financial institutions to block payments from online gaming companies black-listed by French authorities.

The EU moved quickly to issue a "detailed opinion" which prevents France from adopting the decree before March 31. If they adopt it after this date the EU can then launch infringement proceedings.

Sigrid Ligné, secretary general of the European Gaming and Betting Association welcomed the move. "[The] action consolidates the Commission's position that unjustified payment blocking in our sector clearly contravenes EU law. We welcome the Commission's action and hope that this will send a clear signal to other EU and EFTA member states that such proposals will not be tolerated."

Other EU countries including Germany, Norway, and the Netherlands are considering similar restrictions, but as demonstrated by the U.S. experience "such restrictions are difficult to implement, easy to circumvent, inefficient and foster the growth of an underground market" said Ligné.

British Super Casino Plan Ditched
The British government has put the final nail in the coffin of its "super casino" play when it announced it would opt instead for 16 smaller casinos around the regions in Britain.

The City of Manchester had originally been given the green light for the casino, which the government believed would help regenerate a disadvantaged part of the city by generating 2,700 jobs, but amid much outcry as a result of the initial decision, Prime Minister Gordon Brown subsequently u-turned, much to the chagrin of mega-casino operators in the U.S. and Far East.

There is now expected to be a clamour among casino operators such as Rank, Genting Stanley, and London Clubs International to secure their share of the 16 licences.

Bwin in Move for Sporting Bet?
British newspaper the Sunday Express has reported a renewed bid by Vienna-based Bwin for Sportingbet PLC, the online gaming group it first targeted almost two years ago.

The reported bid of 70 pence sterling per share values the company at £290 million and is expected to come within a few weeks, according to the paper.

Bwin first showed interest in Sportingbet, which owns Paradise Poker, in March 2006 when it tabled a bid of 65 pence, but the bid eventually collapsed after months of negotiations.

Unibet Poker Grows
Maltese-based bookmaker and online gaming provider Unibet's gross winnings revenue for the fourth quarter 2007 was £24.5 million, up from £19.4 in the same period in 2006, while full year revenue from winnings was £81.4 million, up from £71.8 to the year-end December 2006.

Poker represented 33 percent of the non-sports betting gross winnings in the fourth quarter of 2007 and casino represented 51 percent.

"In Sweden, poker is back to growth in the quarter versus last year and had close to 10 percent growth versus third quarter 2007," the company said in its year-end report. "Furthermore, the active customer base has continued to increase for both Unibet and Maria Holdings with a total increase of 15 percent compared with previous quarter."

At the end of 2007, the company had more than 181,000 active poker customers (including Carlos Poker), up 115 percent from 84,000 one year earlier.

World Poker Tour Trims Back Events
World Poker Tour Enterprises is to reduce the number of events on its World Poker Tour from 20 to 14. Except for a quick trip to Niagara Falls in Canada players won't now leave the United States to play.

The tournaments that were cut were the Mirage Poker Showdown, the Mandalay Bay Poker Championship, the Ladies Night Invitational, the Turks and Caicos Poker Classic, the WPT Spanish Championship, and the World Poker Challenge.

CEO Steve Lipscomb said of the move, "Well, I can say that mostly what went into that decision has lots to do with the market. Players let us know [where they prefer to play] verbally, and they also vote with their tournament dollars," Lipscomb said. "I think we're trying to be mindful of places that people really want to go, where they want to play, and the properties that really have the resources and the dedication to be able to grow substantial events over time."

Svenska Spel Poker Up 87 Percent
Swedish state-run gaming monopoly Svenska Spel's online poker revenue grew 87 percent to SEK 385 Million (approximately €41.4 million) between March 2007 and December 2007, compared to the same period in 2006.
Overall full-year revenue for 2007 was SEK 5.25 billion (approximately €560 million), up just under 10 percent on 2006, with sports betting up almost 25 percent and bingo up 23 percent.

Size of EU and U.S. Online Gaming Markets Estimated
British MEP Arlene McCarthy, chair of the European Parliament's Internal Market and Consumer Protection Committee (IMCO), was recently quoted by the Kuwait News Agency as saying there were 3.3 million regular online gamblers in Europe gambling €5 billion.

The report said the IMCO hosted a hearing on the consumer and internal market aspects of online gambling and sports betting where McCarthy is reported to have reiterated that while EU member states have the right to set their own laws on gambling, no member state has the right to set hypocritical laws that discriminate in favour of domestic and government-owned operators.

Meanwhile, a Price Waterhouse Coopers (PWC) study revealed that the United States has the potential to collect at least $8.7 billion and up to $17.6 billion in the next 10 years if it would tax and regulate online gambling, including poker. And those figures don't include potential sports wagers.

Pacific Poker Revenue Up 16 Percent
888 Holdings, the second-largest online gaming company in the UK, saw fourth-quarter revenue rise by 55 percent to $62.8 million as both the Pacific Poker and Casino-on-Net brands continued to flourish.

Poker revenue grew 16 percent in the fourth quarter of 2007 to $21.4 million while casino was up 60 percent to $35 million. Active customers across both platforms were up 26 percent to $270.

The company withdrew from the U.S. market in 2006 as a result of legislative changes there and subsequently lost half its revenues. It has since committed to growing sales through additional platforms across Europe and Asia with sports betting and casino being the focus.

iPoker Revenue of $9.4 Million in Fourth Quarter
Leading UK/Israeli gaming software provider Playtech has reported a jump in fourth-quarter 2007 revenues of 101 percent to $32.7 million.

The company, which supplies companies such as Blue Square, Bet365, and Paddy Power with its iPoker platform, reported poker revenue up to $9.4 million, while casino revenue rose to $22.9 million in the three months to December 2007.