In a shocker of a deal that was announced early on Friday morning, 888 Holdings emerged as the suitor for bwin.party. After hectic negotiations that seemingly involved every power player in the online gaming industry, 888 Holdings was able to put together a deal of £898.3 (roughly $1.4 billion U. S.) to overtake GVC Holdings and their partnership with Amaya Gaming.
Analysis from Bloomberg Business says that the purchase of bwin.party will allow 888 to “increase its scale in a market being challenged by increased regulation and higher taxation.” The combined revenues of 888 Holdings and bwin.party from 2014 show that earnings would come in around $1.1 billion, a sizeable chunk of the international online gaming and poker market. The deal also allows for 888 Holdings to have additional pieces that may be liquidated at a future date should situations arise. “The deal is strategically compelling for 888 and they look to have secured bwin.party for a reasonable price and efficient structure,” Nick Batram, an analyst at Peel Hunt in London, said to Bloomberg.
Left out in the cold on this deal is the GVC Holdings/Amaya Gaming partnership that seemed to have the inside track only a little more than a week ago. Gaming Intelligence reported on July 9 that the deal was all but sealed between these parties, with GVC/Amaya offering 110 pence per share to absorb bwin.party into its business. At that time, bwin.party officials stated that they were “determined to work with GVC so that they can finalize their offer over the coming days.”
After the announcement of that deal, 888 Holdings geared up to make what would prove to be a winning offer. 888 Holdings and bwin.party had previously held discussions about a merger but no fruit was ever borne from the talks. The deal put together by 888 was slightly less than the one proposed by GVC/Amaya, but the potential for bwin.party shareholders to own 48.9% of the newly merged company was the tipping point of the discussions.
For the international customers, there will probably be little to no change in activities. While bwin.party has strong sports betting and poker platforms, it isn’t likely that 888 (who also has equally strong sports betting and poker houses) will shut either of them down. In essence, it will be something along the lines of what the Rational Group – and now Amaya Gaming – have done with their ownership of PokerStars and Full Tilt Poker: use both arms to garner as much of the market as possible.
Where the big changes might be seen is in the online poker world in the United States, surprisingly. 888 and bwin.party were both invested in the New Jersey online gaming market. With the twosome now united, it will allow them to have a virtual monopoly on the Garden State scene; between the 16 online gaming sites under the regulation of New Jersey gaming authorities, 888 and bwin.party have involvement with at least half of them and the monopoly regarding online poker.
Alexandre Dreyfus, the head of the Global Poker Index and Chief Executive Officer of Mediarex Sports & Entertainment, said in an official release on LinkedIn that the new deal will bring a true battle to the New Jersey scene, especially after PokerStars opens shop sometime in 2016. “It is better to see PokerStars owning 40% market share in New Jersey and having 888-Party-Borgata-WSOP to own 40% too instead of having 888/WSOP 20% and Party-Borgata 20%,” Dreyfus wrote. The equal competition between the parties should bring out the best in each organization in all phases of the business and may, Dreyfus opines, give PokerStars a better shot at being licensed in other states (due to the merging of 888 and bwin.party).
On the downside, Dreyfus realizes that there are some things that won’t be good for business. 888/bwin.party only draw about one-fifth of the numbers that PokerStars draws internationally. To have a significant impact, Dreyfus admits that 888/bwin.party are going to have to “poach” players, something that is never good for business. Dreyfus also is concerned about the more businesslike approach of 888 and its focus on companies rather than players. “Poker in the next two years is going to be much more based on lifestyle, entertainment and sports, values that 888 will have to discover,” he wrote.
What changes will come from the new partnership between 888 Holdings and bwin.party will be interesting to see. It is without a doubt, however, a seismic change to the online gaming and poker industries.
