Pan-European online gambling operator Bwin.party digital entertainment is reportedly pondering a split into two separate entities; one to service regulated markets and the other targeting so-called ‘grey’ or black markets. The Financial Times reported that Bwin.party was “working on a plan to spin off its unregulated operations into a separate company.”
While no further details were offered as to what the mechanics of such a division of responsibilities would entail, the FT volunteered trader speculation that such a split would make Bwin.party “a target for casino operators keen to take advantage of US legislation.” The rumor’s more immediate effect was to send Bwin.party stock up 3.9% on Tuesday to close at 135.9p, its highest close since mid-May.
True or not, the rumor suggests there’s been some serious rethinking of Bwin.party’s recent decision to pull out of 18 ‘grey’ markets as part of the ‘value not volume’ strategy espoused by CEO Norbert Teufelberger (pictured above, midway through the rumored cell-division). The strategy led to some dire Q1 numbers and the company has warned that Q2 was shaping up to be even worse. And despite Bwin.party’s stated aversion to ‘grey’ markets, it was just last month that the company’s Swiss-facing subsidiary was called out by that country’s government for its “misleading” use of the Swiss coat of arms to imply some kind of state-sanctioned operation.
Bwin.party has been busy tidying its regulatory closet of US skeletons – including a $15m ransom to the Commonwealth of Kentucky – to ensure no hiccups occur while its online gambling license applications in New Jersey and Nevada are pending. Meanwhile, would it be too much to hope that the two halves of a newly split Bwin.party would be named Bwin and PartyGaming? Too soon? How about Bwin.party.unregulated?
BOYD EXECS SHED LIGHT ON BWIN.PARTY JOINT VENTURE SCOPE
Meanwhile, Boyd Gaming, which, along with MGM Resorts has teamed up with Bwin.party for US-facing online gambling opportunities, has shed a little more light on the joint venture. In a post-earnings call with analysts on Tuesday, Boyd CEO Keith Smith said the partners would offer online poker, slots and table games under both the PartyPoker and Borgata brands (Boyd and MGM are joint owners of Atlantic City’s Borgata casino).
Bwin.party owns a 65% stake in the JV, with MGM holding 25% and Boyd the remaining 10%. Smith said the “contractual relationship” called for Bwin to provide “software to us and they will be paid a fee for providing that software infrastructure … if [Bwin.party] are able to launch their own product, they will do that. If that’s approved by the regulators. We will own kind of 10% of that business for our contractual relationship, and therefore, receive 10% of the profits of that business, if they’re able to open a separate US-based business. That could be in New Jersey or could be any other state in the US.” Boyd COO Paul Chakmak further clarified that “we have our JV relationship at the Borgata and Boyd will own the 10% interest in any B2C operation that Bwin.party launches.”