Amaya closes in on Ongame acquisition

Posted on September 18, 2012 by r.weston

Canadian online gambling software provider Amaya Gaming group will announce its acquisition of bwin.party’s poker network Ongame for an unknown sum by the end of the week, eGaming Review can reveal

Canadian online gambling software provider Amaya Gaming group will announce its acquisition of bwin.party’s poker network Ongame for an unknown sum by the end of the week, eGaming Review can reveal.

The service provider, that has been courting the loss-making poker network for the last two months, recently entered into an exclusive preferred bidder position with Ongame’s owner bwin.party that has been looking for a buyer since the spring of last year when it publicly deemed it a “surplus asset” following the merger of Bwin and PartyGaming.

A source within the company said the deal had been done for “two weeks” but that negotiations had been on-going for the last two months.

Amaya’s chief executive David Bassov is known to be on leave until the middle of this week and could announce the deal as soon as the next 24 hours, according to the source.

The cost of the deal is not known although bwin.party co-CEO Jim Ryan is understood to have been holding out for a similar fee to that of previous bidder Shuffle Master that had agreed to acquire the network for €19.5m in March but “mutually agreed” to cancel the deal three months later. It cited Ongame’s recent performance, along with difficult economic conditions in Europe, for making the deal no longer financially viable. “It has become evident to us that Ongame’s operations post-acquisition will not achieve the near-term results we initially expected and will require a larger on-going investment than anticipated,” Shuffle Master’s CEO Gavin Isaacs (pictured) said at the time.

According to numerous sources the network is thought to be losing between €500,000 to €1m Euros per month and employs around 200 staff in Sweden. Swedish staff are notoriously difficult to ease out of a business if shutdown or acquired.

The price however, could have come down with US supplier IGT being forced to shut down IGT Poker last week, formerly Entraction, just 16 months after it acquired the company for £70m. eGR also understands that IGT will have to pay up to $40m to pay off Entraction’s employees and to fully close the operation – an area that has put off a number of bidders for Ongame including social gaming business Zynga that flirted with acquiring a ready-made poker platform in preparation for a regulated US market.

Officials at both Amaya and bwin.party refused to comment when contacted by eGR.

The supplier has been on the acquisition trail for the last 12 months buying both well-established online games manufacturers Chartwell in May 2011 and more recently CryptoLogic in February this year. Cryptologic has a large portfolio of casino games licensing games to a number of tier one and two operators, however it experienced a number of financial problems in the last few years and was eventually snapped up by the Canadian newcomer for $36m.

The acquisitions of CryptoLogic and Chartwell games helped the Montreal-listed software provider record a year-on-year revenue increase of 285%, the company revealed in its results for the three months ended 30 June at the end of last month.

Gross profits amounted to $14.1m, equivalent to 97% of group revenues, however it also recorded a net loss of $2.7m due in part to general and administrative expenses of $12.4m, related to operations in territories such as Kenya, where the company launched the first regulated egaming offering in October 2011.

Since the end of the second quarter, Amaya has also made its first move into the Belgian market through a deal with Circus Groupe subsidiary Circus Services SPRL, focusing on its casino777.be site.

It has recently also launched its first mobile casino games including a selection of its own as well as blackjack and a variety of lottery across all mobile platforms, smart phones and tablets. At the same time it launched a live dealer solution in conjunction with HoGaming.

At the beginning of August Amaya announced a three year licensing agreement with Betfair supplying the operator with a selection of its proprietary and branded games via an Openbet integration onto the Betfair Arcade to complement its existing content.

James Bennett

IGT poker network closure “set for December”

Posted on September 13, 2012 by r.weston

Operators on the network, formerly known as Entraction, given deadline to find a new home

Operators with poker skins on the IGT Poker Network have been given until 11 December to find a new home as the multi-channel gaming company prepares to shut down the network, eGaming Review sources have confirmed.

An email circulated amongst representatives of sites on the network – known as Entraction before being renamed in January this year – confirmed the date by which they would have to move to pastures new.

Revelations that the Nevada licensee would “consolidate its product development” in the light of “change and uncertainty in European market conditions [diminishing] the expected returns in certain real money wagering products” have been followed by the confirmation from licensees that the closure of the dot.com-only network is imminent.

IGT acquired the Swedish-owned network in May 2011 for approximately £70m, and in the 16 months since it has seen liquidity diminish after pulling out of markets such as Canada, Israel, Norway, Russia and Turkey.

As a result of this, certain operators on the network have already set up secondary rooms elsewhere, with BetVictor launching a poker room on the Microgaming network to cater primarily to its notable Israeli player base.

It has fallen from a top 10 ranking on Pokerscout to now sit outside the top 20, with average player numbers trailing even the dot.country offerings of several operators, and a number of executives have left IGT as a consequence of the under-performance.

One IGT Poker skin, iGame, has told PokerUpdate that it has “finalised an agreement with one of the world’s leading poker networks to join [its] poker platform.” iGame’s brands include 24hPoker and Pokerihuone as well as its eponymous room, and it is thought to be among the largest skins on the network.

eGR has been unable to obtain confirmation on the future of other operators, although the likes of BetVictor (with its secondary room on Microgaming) and Betsson (with a room on Ongame) may be tempted to keep their entire offering on just one network.

BetVictor’s poker offering had previously sat on Playtech’s iPoker network before leaving it for Entraction – as it was then known – in December 2010. However a return to that network could be complicated by the continued uncertainty regarding the newly implemented two-tier system which has seen certain operators prepare to set up an action group to discuss shared concerns.

Tom Victor

Exclusive: IGT pulls back from poker as returns “diminish”

Posted on September 12, 2012 by r.weston

Change and uncertainty in Europe “diminished expected returns in certain real money wagering products” – company forced to “consolidate product development”, says IGT spokesperson

Global gaming content supplier IGT is to pull back from its continued investment in its 16-month old, £70m Entraction poker network with its existing European dot.com poker licensees thought to have been warned to migrate players elsewhere, eGaming Review understands.

The newly Nevada licensed service provider acquired the largely dot.com poker network at the beginning of May last year for US$115m (£70m) with the aim of one day using the software in the US, regulation permitting, but at the same time continuing to operate and service several European facing dot.com brands such as Betsson, BetVictor and Betdaq.

Since the deal was struck, however it has been forced to shut off a number of black markets including Canada, Israel, Norway, Russia and Turkey, has been rumoured to have been forced to rebuild the vast majority of the platform and, despite a rebrand to IGT Poker, has seen liquidity fall dramatically as a result dropping to 20^th in the Pokerscout rankings in between Ongame and Gtech’s Italian facing networks. As a result of the country shut off some licensees, such as BetVictor, sought alternative poker offerings in order to continue taking players from unregulated markets, while seven day average liquidity numbers on Pokerscout have fallen by almost 50% in the last six months from more than 1,000 in February to just above 500.

At the time of the Entraction acquisition the network had a seven-day average of 1,440 cash game players according to PokerScout, placing it between 888 and Microgaming, however in an interim report for the three months ended 31 March 2011, operating profit was down 21.66% year-on-year to SEK8.1m (£808,888) and profits down from SEK10.67m to SEK7.84m, a decrease of 26.5% on the same period in 2010.

A trio of high ranking executives have also paid the price for the Entraction buy with the VP of corporate development and strategy, who served for less than a year, the first to fall. Two other IGT executives have also since departed: Alex Kelly, former VP interactive sales and business development, and Gideon Bierer, who was responsible for IGT’s global interactive (online and mobile) business for just over two and a half years.

eGR cannot confirm whether or not the network faces closure with an IGT spokesperson in the US refusing to answer the question directly, however he added that “change and uncertainty in European market conditions had diminished the expected returns in certain real money wagering products” and that, as a result, the company has been forced to “consolidate its product development”. When asked to elaborate on the statement the spokesperson failed to respond.

He added that the company was “maintaining its options for future changes in market opportunities” and that the decision, despite not clarifying what it meant, is “purely focused” on its European dotcom business and that it does “not impact future decisions regarding entry into new markets as regulation, taxation and commercial opportunities arise”.

The statement continued: “As part of our regular business process, we have been evaluating our resources, products and markets from a commercial and compliance perspective. As a result, we are consolidating our product development, allowing us to combine a number of locations and focus on the most attractive opportunities.

“We remain focused on our interactive casino/slot offering, which has experienced steady growth, and look to integrate the Entraction products into our overall set of platform offerings.”

James Bennett

William Hill and IGT receive Nevada recommendations

Posted on June 8, 2012 by r.weston

Applications recommended for approval by state’s Gaming Control Board – will now go before Nevada Gaming Commission

William Hill and International Game Technology (IGT) have become the latest Nevada licence applicants to have their applications recommended for approval by the Silver State’s Gaming Control Board (GCB) following separate hearings last night.

The two parties follow Bally in receiving approval from the GCB, with the gaming machines manufacturer announcing yesterday that it had become the first to pass this step in the licensing process.

Both Hills and IGT will now go before the Nevada Gaming Commission (NGC) at its June 21 meeting, which is also when the application from Bally will be discussed.

IGT chief executive Patti Hart said the company was “honoured” to become one of the first software providers to be recommended for a Nevada licence, adding: “This important step will allow IGT to better support our customers as they expand their offerings to their players to include interactive wager based entertainment.”

Today’s news comes around one year after the company agreed to purchase poker network Entraction - since renamed IGT Poker – for close to £70m, and four months after it acquired social casino Double Down Interactive for US$500m.

Meanwhile William Hill’s recommendation for approval follows its acquisition of a number of Nevada-facing sportsbooks over the last 14 months.

In April 2011 the London-listed operator paid a combined $39m (£23.9m) for the American Wagering and Cal Neva sportsbooks, while the following month it agreed to acquire Brandywine Bookmaking - which operates in Nevada and Delaware – for an undisclosed amount.

Hills’ Nevada application had looked under threat earlier this year, with delays caused by the GCB carrying out investigations into associated personnel including head of strategy and corporate development Robin Chhabra. This, along with an examination of the operator’s ties with Playtech, had threatened its early appearance on the GCB agenda.

If it receives NGC approval later this month William Hill will have the green light to create its Nevada-based subsidiary William Hill U.S. Holdco Inc., under which land-based, online and mobile operations will be consolidated.

In an interview with Nevada newspaper the Las Vegas Review-Journal, American Wagering’s senior vice president business development and public affairs John English said the recommendation “marks the start of a great future for William Hill in the state of Nevada.”

Tom Victor