For the past 6 months, business news wires have been abuzz with talk of massive mergers between big online gaming companies. No deal has garnered more attention than the mooted partnership between bwin and PartyGaming. Rumors began to swirl in the summer of 2009, but the pair firmly denied that consolidation was in the offing. A few months later, both organizations have been forced to admit that a merger may be in the cards.
Major news outlets and stock market investors are keeping a very close eye on this story. Both companies have had posted strong recent financial numbers, buoyed by optimism over a possible merger. PartyGaming recently announced that they had increased their revenue by 32 percent in the 4th Quarter of 2009, up to a total of $132 million. For their part, bwin has seen massive growth over the last 12 months, with share prices rising 300 percent in 2009. As things stand, bwin has now overtaken the once dominant PartyGaming in terms of company value. At $2.2 billion compared to $1.8 billion, bwin would be the leading force when it comes to any partnership.
Both companies are now openly admitting to discussions, but are still refusing to make any firm commitments. The Guardian quotes bwin chairman Hannes Androsch as having said, “Talks are going on but we don’t know yet whether they will succeed.” Meanwhile, PartyGaming CEO Jim Ryan has alluded to “active discussions.” In a more official statement, PartyGaming revealed, “The board of PartyGaming confirms that it is continuing to hold discussions with a number of companies in the gaming sector regarding potential consolidation opportunities.” The fact that neither firm wishes to be drawn on a specific consolidation partner seems to indicate that multiple companies are being considered. “I do think there’s going to be a domino effect, meaning the first deal gets everybody else to run,” an unnamed source told Reuters. Gambling companies like 888, Sportingbet, and Unibet are all thought to be keen on joining forces.
However, the most likely deal remains a union between PartyGaming and bwin. There are a number of reasons why the two are such a suitable match, first and foremost being their size. Bwin has the largest market share of the European gambling market at 8%, with Party in second place at 6.3%. There is no single dominant force in the world’s most lucrative gaming market and the potential power of a new super-company is enticing to executives on both sides of the table. Secondly, both firms make up for each other’s deficits. Party has an excellent casino player base, while bwin is the region’s most popular sportsbook. As far as online poker is concerned, both are major players. According to PokerScout.com, PartyPoker has recently retaken the 3rd spot in the ranking of network traffic – making them the most popular online poker network not to accept U.S. customers. Bwin’s Ongame network sits 5th overall and would present a serious challenge to Full Tilt were it to join forces with PartyPoker. If the UIGEA is repealed in 2010, then the potential for a huge influx of new players may well create a third major player in the online poker industry.