Bwin.party digital entertainment blamed a number of factors for a drop in revenue during the third quarter. Pro-forma revenue dropped by 5 percent to €184.4million with average daily revenue also down by 8 percent. Germany was apportioned most of the blame after the country, one of bwin.party’s integral markets, introduced a 5 percent turnover tax on sports betting earlier this year. They weren’t the only ones to be marked out for blame by co-CEOs Jim Ryan and Norbert Teufelberger.
“The introduction of a 5% turnover tax on sports betting in Germany, revenue decline in poker and continued pressure on consumer spending, particularly in parts of southern Europe, held back our performance in the third quarter. An unfavourable run of football results in our core markets in September together with the previously announced delay to the start of the Bundesliga were also contributing factors. However, we are encouraged by a marked recovery in trading across all products since 30 September,” Ryan and Teufelberger commented.
Sports, where the impact of the German tax was felt hardest, saw wagers drop 8 percent to €828.3m after the firm was forced to remove certain odds due to them no longer being viable. Casino and games saw a drop of 5 percent in net revenue to €65.2m, poker net revenue dropped 29 percent to €37m, whilst bingo increased its revenue by 1 percent to €14.8m. Every cloud, eh!
As far as poker is concerned the company is hopeful of a return to growth after integrating their networks following the completion of the sale of Ongame just yesterday. It’ll also contribute €15m in cash straight away. Even though they’re optimistic about the integration of Bwin and PartyPoker onto one platform and confident of the success of their real-money poker in partnership with Zynga there’s one thing in place that will scupper these plans – PokerStars and its rapidly expanding market share. If you also take into consideration that Full Tilt Poker is relaunching in a matter of days, a recovery for bwin.party’s poker product is far-from certain.
The USA is still the apple of bwin.party’s eye and they, like everyone else, await the “lame duck” session to find out the fate of Senator Harry Reid’s oft-criticized federal online poker bill. Bwin.party has a partnership with various parties and will be ready for the off whatever happens, with today’s release reiterating they are “well-positioned to enter the US either on a federal or intra-state model”.
Good news is that the market, so far, likes what it sees with the firm’s share price rising by 1.90 percent to 123.30p. We’ll see what the US market of the results in relation to Zynga when the market opens later on and whether both can scratch each other’s backs enough to make their partnership as fruitful as possible. The scope of the UK deal won’t be enough to give either company that significant a boost, though it could kickstart a future of which the US will be key component.
