Party888? Online Gambling Giants Have Coffee

November 3rd, 2012  :  Written by Patriot #2

Party888 logoThe latest news out of the Guardian UK is that PartyGaming and 888 Holdings have chatted over coffee about the possibility of a merger in light of the US Gambling Ban. Both are publicly listed in the UK, both operate out of Gibralter [offices on the same block] and the merger has been estimated at a value of $3B USD. Since the ban Party stock lost 70% of its value while 888 lost about 25%.

PartyGaming runs PartyPoker, what once was the largest online poker room, while 888 owns Casino-On-Net and Pacific Poker, no slouches themselves. The problem for Party mainly lies in the fact that at least 75% of its revenues came from the US market, so when they pulled out after the ban, they started sucking wind. 888 wasn’t impacted as much after pulling out America, since they’ve been marketing internationally for years and perhaps 50% of their revenue comes from the US.

So what do we make of this?

Well, it’s obviously early stage for merger talks, but that aside, what’s the real impact on the industry and players? This is where it gets interesting.

Let’s say I’m a UK player and I’ve been playing at PartyPoker because of the sheer number of other players. Then one day 75% of the players go away because they’re from the US. So what do I do? Stick with Party? No way – I want to go where the players are, so I start looking for poker rooms that still accept Americans, places like Scarlet Poker, Ultimate Bet, Full Tilt Poker, etc [go here for a complete list of places to play]. Where does that leave PartyPoker? Sucking even more wind because now their international players are leaving too, and revenue plummets further. The situation isn’t much rosier for 888 or the other major pub co’s either.

So one move from the US could collapse public, legally operating companies from many other nations. Shining stars of foreign public markets disappear and drive down the value of their stock market index – most countries don’t like that. Imagine if Microsoft disappeared from the Nasdaq one day – that’s impact.

Anyway, there’s an international battle brewing behind the “innocuous” moral arguments of our special-interest friends in Washington. One can imagine Bill Frist getting a cavity search upon arrival at Heathrow. Don’t worry, we’ll publish the photos.

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