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The perils of investing in poker
Following bwin.party’s failed attempts to dispose of “surplus asset” Ongame, why has the sale of two of the industry’s best known poker networks and investment in poker products either fallen through or failed to live up to expectations? James Bennett reports
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ith the gaming industry unexpectedly unwrapping an early Christmas present at the end of 2011 courtesy of the US Department of Justice’s reclassi?cation of the Wire Act, global operators and suppliers began to wake from their enforced six-year slumber and rapidly huddled together to strategise as to just how they could crack a regulated US online poker market. Some had been planning this moment for many months, while others began to sniff around the sale racks for potential bargains. But with little or no expertise in online, and time of the essence with no clear view as to how, when and where the US would regulate, they had to move fast. IGT – limited poker options First came IGT Interactive, the online arm of one of the world’s largest land-based casino suppliers, whose executive team had one of egaming’s biggest warchests with which to conquer a newly regulated US market. Swiftly on its heals came Shuffle Master, another listed US supplier whose 300 global licences and unique intellectual property, which it licenses to land-based organisations, are being transferred into the online and social spheres. It too was ready to invest in online poker and had decided that acquiring proven, existing technology that had serviced the pre-UIGEA US market and
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€19.5M
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Initial fee Shuffle Master agreed to pay to acquire Ongame before it withdrew in June
the increasingly fragmenting European dot.country space was more cost effective and strategically astute than to spend vast sums building and developing its own platform. The acquisition options, however, were limited. Buying an operator outright may have been an option for IGT but it had bigger plans for social gaming in the form of Double Down – which it acquired in January in a deal worth up to $500m – and the new social casino demographic that is taking to slots and poker on Facebook in their millions. The branding, marketing, crossover and cross-sell potential of social was enormous and, at the time, worth the risk. In poker, buying or investing in Full Tilt was not an option due to the uncertainty and ongoing civil and criminal cases against the “Ponzi scheme” alleged former Alderney licensee and the hundreds of millions of dollars owed to players; it had no choice but to ignore networks still taking US players; while a number of other operators were offlimits. The same applied to Shuffle but IGT was the ?rst to take the plunge. In late 2011, it carried out its due diligence – some commentators eGaming Review spoke to said too rapidly – and opted not for Ongame, a network that owners bwin and PartyGaming had deemed a “surplus asset” in February last year prior to completing their merger, but for its Swedish
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