Mitch Garber, Chief Executive of PartyGaming, predicts the new US legislation will spark a round of consolidation among internet gambling companies.
“We are very focused on mergers and acquisitions. I see our liquidity as being very attractive to smaller players who may not be able to survive on their own,” said Garber.
The CEO of PartyGaming also told the Financial Times that he forecasts American land-based casino operators, such as MGM and Harrah\’s, to enter the online stage.
888\’s future Chief Executive Gigi Levy said consolidation would happen first between online operators in order to restore the high margins lost by the US debacle, followed by takeovers by big onshore operators coming from both the US and the UK.
Levy also believes 888 can reinvent itself in the US as some sort of online entertainment unit offering legal products such as fantasy sports games.
“Our core capability is not gambling per se, it is bringing people to the website, selling them the products and giving them the best customer service,” said Levy. “We are an online entertainment company. We\’ll take those capabilities to other products and we see fantasy sports as a possibility.”
Some industry analysts seem to believe that companies moving out of the US market will focus on expansion in Latin America, Europe and Asia.
But Paul Leyland, analyst at Arbuthnot Securities, warned that the transition into Asia would not be easy for companies without knowledge of the market, while a move into Europe, particularly in countries such as France and Germany, would not be the cure to American problems.
“The U.S. is one of the easiest gambling markets to make money in,” he said. “The rest are harder — just ask the people at Bwin.”
Centrebet Chief Executive Con Kafataris said that while the US law would have no impact on the Australian market, internationally the effects could be drastic.
“The new law could make underground operations mushrooms,” he warned. “I think the government probably needs to make sure punters don\’t go underground, so it doesn\’t go back to the 40\’s and 50\’s of the Mafia days. This law will create more opportunities for those types of operations.”
Kafataris also thinks the new law may be a move by the US to create an increasingly exclusive market.
“The US government probably wants to get rid of the foreign operators and open it up for onshore opportunities,” he said.
A recent statement of WPT Enterprises, the company that helped launch the global poker boom, seem to reinforce Kafataris\’ idea.
WPT encouraged the US poker community to focus on the bright future as it said the Congressional passage of the “Unlawful Internet Gambling Enforcement Act of 2006 clarifies the rules and makes it possible for everyone to move forward on an even footing.”
Calculators
