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|Bwin.party and 888 see shares soar after crackdown on US poker
| UK online gaming
companies see big wins as American competitors face illegal gambling charges
Shares in UK online gaming
companies have soared after the websites of some US rivals were shut following
a government crackdown on illegal gambling.
Bwin.party shares shot up 30%, with Playtech and
888 Holdings up 8% and 19% respectively, as investors bet on high-value
players, affiliates and processors switching to safer sites.
The big wins for the European companies, which do
not operate in the US, followed moves by the US government on Friday to charge
the founders of three of the world's largest online poker companies. In what
amounted to the most drastic crackdown on electronic gambling since Congress
banned the industry in America in 2006, the government accused the creators of
Full Tilt Poker, PokerStars and Absolute Poker of illegal gambling, money
laundering and bank fraud.
Execution Noble analyst Geetanjali Sharma
said: "The US-facing operators have been a drain on the profitability of the
European operators as their US liquidity drew the non-US poker players. At the
same time these operators diverted cash gained from the US operations to gain
market share in the regulating territories in Europe. The closure of the main
competitors' operations and the US legal proceedings initiated against them
should benefit European listed operators."
While non-US players can
still play poker on the banned sites, the disruption and seizure of funds could
make it difficult for the operators to continue and may drive some punters to
rival operators. In the world of online poker, the more players a site has, the
more attractive it becomes to new players, as it is easier for them to find
games with the appropriate level of stakes and payouts.
argument has worked in favour of the sites that have operated illegally in the
US since 2006. In January 2007, PokerStars and Full Tilt together accounted for
about 30% of the market, but that had doubled before last week's crackdown,
according to gambling data provider H2 Gambling Capital.
Holliday, a director at H2, advised caution, saying: "The market always
overshoots. There may be a transfer of accounts to the likes of [Bwin.party's]
PartyPoker, but this will occur over time."
Analysis by poker
monitoring website PokerScout.com suggested that traffic to PokerStars has
dropped by 25% over the past week, while Full Tilt slumped 48%. Conversely, the
number of visitors to PartyPoker and 888 increased by 8% and 5% respectively.
Meanwhile on Saturday, Las Vegas casino group Wynn Resorts cancelled
the deal it had struck with PokerStars just three weeks ago, while Fertitta
Interactive, the owner of Station Casinos, also pulled out of its recently
announced deal with Full Tilt.
Analysts now expect European operators
to aggressively pursue similar deals with the major casino operators in
preparation for the long-awaited regulation of the US gambling industry.
Michael Caselli, editor of trade magazine iGaming Business, said: "I
think for [Wynn and Fertitta] it's a case of once bitten, twice shy. I think
they will do these deals, but there won't be anything until we see some serious
The US move represents a stark change of fortune for
UK-listed poker operators. Bwin.party, which was created from the merger of
Bwin and Party Gaming, and whose shares began trading on the London Stock
Exchange at the end of March, saw its stock slump in its first week as a
combined group, on news of a proposed new betting tax regime in Germany.
Meanwhile, 888 was hit last week by the withdrawal of bookmaking group
Ladbrokes from protracted takeover talks.