iGB North America magazine IGBNA Aug/Sep | Page 53

Business and Finance

Two Month Performance: May to July 2015
1,050

iGaming Index

S&P 500

1,025

1,000

975

950

925
15 May

20 May

25 May

30 May

4 Jun

9 Jun

14 Jun

19 Jun

24 Jun

29 Jun

4 Jul

9 Jul

14 Jul

* Period from May 15th to July 14th 2015

performer, up 29.1%, as the company’s CEO
Gavin Isaacs continues to win over Wall Street
over after absorbing WMS, SHFL and Bally.
Volatility has always been a common
characteristic among the top 35 publicly
listed companies in the iGaming sector. This
period proved no different, with close to half
of the companies moving over 10% within
a mere 43 trading days (representing the
full two-month period) and five companies
moving over 20%. Surprisingly, the majority
of the companies that have moved more than
20% in the 43 trading days had a market
capitalization of over $1.5bn, and it’s pretty
rare for companies of this size to have such
sharp moves.
This period saw a more even distribution
of share price gainers and losers, with 18
companies advancing and 17 companies
retreating. Of the top 10, only two companies
lost value, with the most significant impact
being felt by Paddy Power, which lost
7.0% over the two-month period. Since the
inception of the bull market a couple of years
ago, few companies fail to garner investor
confidence. Accordingly, Caesars Acquisition
Corp continues to hover at its all-time low.
UK-listed Ladbrokes and GameAccount
Network, both of whom have floundered for

many months, have traded off their lows,
witnessing something of a reprieve for now.
Interestingly, it seems the market seems
to value online game providers more than
their larger land-based counterparts. During
the period, the market capitalization of Net
Entertainment, one of the larger European
content providers, is valued to be greater
than that of the giant US lottery and casino
provider Scientific Games, which owns
WMS, Bally and SHFL, and accordingly has
the vast majority of market share in the landbased gaming market in the US.
For the past year, the iGaming Index
has benefited from the continued strong
financial markets with ease of access to
capital, fuelling a flurry of M&A activity. Just
after the close of the period, 888 appeared
to be the victor in the race for bwin.party,
beating out the joint bid from Amaya and
GVC Holdings. Ladbrokes is also the recent
subject of M&A discussions. Initially, the
suitor was rumoured to be Paddy Power, only
for news to emerge that it was actually Gala
Coral. Payments companies have also been
involved, with both Optimal and Safecharge
completing strategic acquisitions, and who
can forget the most acquisitive company in
the sector (aside from Amaya’s recent binge),

Playtech, which has been gobbling up a
number of financial trading companies on
very advantageous terms. Unibet and Betsson
both remain on the hunt, as well as smaller
companies such as NYX Interactive and
XL Media.

SELECTION OF INDEX COMPONENTS
(includes only companies with some
US online gaming presence, decreasing
order of contribution)
Playtech (+2.8%), the largest contributor
to the index, hit another all-time high
this period on news that the company
announced its third acquisition in the
financial CFD (contracts for difference)
sector. This time the target was Dublinbased Ava Trade for $105m, and is in
addition to the bid for Plus500 a month
ago at a valuation of £460m, which was
the second CFD/Binary Option acquisition
for the iGaming giant. Playtech began its
push into CFDs its first investment in April
with the majority stake in the fast-growing
TradeFX for a total compensation of
€458m (initial payment of €208m wi Ѡ)ѡ