Online gaming companies in for huge 2011, by Greg Tingle

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Could online gaming firms be in the mix of the top stockmarket investments to make in 2011?

The listing of Betfair (BET) at the conclusion of October on a fancy multiple and the $3.3 billion megamerger between PartyGaming and Bwin (PRTY), due to complete in the first quarter of 2011, appears to have added spark to the industry of late.

Then there is the prospect, albeit slight, of the liberalisation of the US igaming market which has put the industry firmly on investors' watch list, including ours, for next year.

It is understandable, as even a snapshot look at the stockmarket gains of the world’s biggest online gaming companies between circa 2004-2006 reveals just how quickly fortunes were made and lost.

The iGaming Global Top 30 Index, an index of the stockmarket performance of the biggest 30 online gaming companies, surged 40% between July 2004 and August 2005. This was followed by 12 months of extreme volatility before sinking thanks to a controversial piece of legislation in the US.

Since 2006, online gaming’s real story has been dominated by America’s Unlawful Internet Gambling Enforcement Act (UIGEA).

The multibillion-pound global industry virtually collapsed in a heap after its biggest market - the US - was closed down overnight when Congress introduced a surprise clause to legislation in September 2006, in effect making internet betting illegal. Not only was that a blow for investors - it was a hugely expensive one.

British-based companies were among the biggest casualties.

As soon as the London Stock Exchange opened the following Monday morning, shares in PartyGaming - then a FTSE 100 member - dived by 58%, while rivals 888 Holdings (888) and Sportingbet saw their shares slide by 26% and 64% respectively, wiping an estimated £4 billion off the sector's value.

The companies were forced to focus on opportunities in other parts of the world, but the businesses have never fully recovered from the impact of losing their most lucrative market. Last year, online gambling was worth an estimated $5.4 billion (£3.5 billion) overall, a figure that could rise to $12-$16 billion if the market was opened up, analysts say.

Despite the recent loss of a sympathetic Democrat majority in Congress last month, there is renewed hope of floated gambling companies being dealt a good hand on both sides of the Pond.

The new Republican chairman of the House financial services committee is likely to be an old-style Alabaman named Spencer Bachus.

Yet he is likely to listen to the prospects of a reinvigorated gambling sector for the ailing US economy. The Federal government’s non-partisan accountants, the Joint Committee on Taxation, have estimated online gambling could generate between $10 billion and $42 billion in new revenue by 2019, depending on the number of states that opt into a federal regulatory programme.

Yet he is likely to listen to the prospects of a reinvigorated gambling sector for the ailing US economy.

The Federal government’s non-partisan accountants, the Joint Committee on Taxation, have estimated online gambling could generate between $10 billion and $42 billion in new revenue by 2019, depending on the number of states that opt into a Federal regulatory programme.

And you can see why if you glance at the forecast numbers.

With the US nationwide unemployment rate at 10%, 48 of 50 states facing budget shortfalls and a Federal deficit approaching $1.3 trillion, the economic backdrop against which to promote regulation and taxation of internet gambling has arguably never been more favourable.

Yet those companies poised to get a real boost should America legalise online gambling, such as the impressive PartyGaming/Bwin combine, are getting excited about the future.

"We are seeing things from a legislative perspective that are quite exciting for us," says Jim Ryan, chief executive of PartyGaming, whose comments undoubtedly reflect the mood of a growing contingent of gambling operators on both sides of the Atlantic.

There has been speculation that PartyGaming and Bwin have decided to merge at this time precisely because they will be better placed than any other operator to seize a huge market share should the US decide to legalise online gambling. You only have to look at the market share that Party was able to capture by becoming one of the first operators into the online poker market back in 2001.

Analysts agree the enlarged company is in a strong position to exploit the opening up of the US market.

In a note to investors recently, the Morgan Stanley leisure analyst Vaughan Lewis said: "The overall political tide is moving firmly in favour of regulation, rather than prohibition.

"With its expertise... market-leading technology, strong marketing capability and good brands, we think the combined entity of PartyGaming and Bwin would be extremely well positioned to benefit from any market opening in the US. We include nothing in our forecasts for the US, so any new market here is pure upside."

And in a recent Barclays Capital research note, the investment bank said: "In the event of Federal regulation, we believe PartyGaming would be the likely key beneficiary.

"Under this hypothetical scenario, we estimate the potential [underlying profits] uplift could be 94% for PartyGaming and 58% for Bwin and 888. On a state-by-state hypothetical scenario, we estimate the uplift for the group would be considerably lower, but still meaningful."

Meanwhile, at the end of October analysts at Numis published a note saying there is 50% upside potential at Party when the merger with Bwin completes in March 2011. With the shares trading at around 230p at the beginning of November Numis have put a price target of 400p on the stock.

The PartyGaming/Bwin merger has got the other big companies in the sector scurrying around to do similar deals. They don't want to be left behind in what will become a gold rush should the US legalise online gaming.

888 and Sportingbet are also possible future takeover targets as the industry consolidates, but only once their legal liabilities in the US market are cleared. Serious negotiations in the PartyGaming/Bwin merger were only concluded once Party had secured a $105 million settlement with US authorities.

Analysts say a resolution would clear the way for 888 and Sportingbet to re-enter the lucrative US market should moves to overturn the 2006 legislation succeed.

Sportingbet has already acted telling shareholders at its latest results meeting that it had made a £22.8 million settlement with the US Department of Justice over an investigation into illegal internet gambling. The agreement means the firm will avoid being prosecuted in the US for accepting online bets made by Americans between 1998 and 2006.

Sportingbet would hold the most appeal to potential bidders, analysts reckon, pointing to its very strong market positioning in Australia and commenting that Ladbrokes (LAD) and William Hill (WMH) could be interested in a takeover.

Liberum Capital analyst Richard Taylor recently highlighted the strength of Sportingbet’s sports betting business, which he said had one of the best gross margins in the sector at around 10%. In addition, he said Sportingbet’s management was open to a bid, having previously stated up to 55% of their cost base could be removed.

Another former giant of the sector, now somewhat depleted thanks to the UIGEA, is 888.

Analysts say 888's attraction would be the potential for cost savings in a tie-up with a rival online gaming operator, and that Party/Bwin might be a possible buyer. What would make it attractive is that both Party and Bwin use 888 as a supplier.

However, the Shaked family who founded the company, and who control over 50% of the shares, would be looking for a price significantly above the 40p at which the company currently trades.

There have been whispers among London traders in the last few weeks that a £262 million, or 76p a share, cash bid from a much bigger industry player, possibly US entertainment giant Harrah's, which already has close business links with 888 could be on the cards.

Certainly 888 chief executive Gigi Levy has said recently that he looks at consolidation as one of the possible routes to realising shareholder value.

Another giant of the industry looking to become bigger still is the mighty Betfair. Having listed on the LSE at the end of October at 1,300p, the shares soon touched 1,600p-plus, as tracker funds piled in confident it will canter into the FTSE 250 index at the December review with a market value above £1.6 billion.

If things are hotting up at the Federal level for the online gaming industry there are also some exciting developments at state level.

So far in 2010, four states have considered whether or not to legalise some combination of online poker, casino gaming and sports betting: Iowa, Florida, California and New Jersey.

The state making most headway is New Jersey, where internet gambling has been under consideration by lawmakers since 2001. It is finally receiving serious consideration in the state Senate where two bills, which would legalise internet sports betting and casino gaming respectively, have already passed the committee stage this year.

From California to New Jersey to Florida, more state and federal congressmen are taking the reality of a legal online gambling regime a lot more seriously.

Whoever wins the race, state or federal, one thing is clear: more and more stakeholders in the US are finally coming around to understand the risks and implication of a ‘do nothing’ strategy. This is an opportunity cost and gambling companies are getting their bets on regardless.

But ongoing political deadlock clearly poses a real threat to regulatory efforts at all levels of American government. But even as gambling industry stakeholders duke it out in the halls of legislatures around the country, as well as on Capitol Hill in Washington, the very fact that the conflict between them is intensifying signals that interest and investment in pushing for online gaming regulation is rising.

With billions of dollars out there to harvest and market share to win, the entire online gaming sector looks ripe for an upturn in coming months. Investing in online gaming companies has always been a white knuckle ride - and there looks to be every sign this particular circus is once again rolling back into town.

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Casino News Media: Palladium VIP's - Spoil Yourself With As Many Presents As You Want From PartyPoker - Santa's Party Pack Open To All On PartyCasino!

Palladium VIP's - Spoil Yourself With As Many Presents As You Want From PartyPoker - Santa's Party Pack Open To All On PartyCasino.com !

** Win your share of $5,000 every day in December. See: PartyPoker.com **

** The first episode of PartyPoker.com World Open VI is now online.

Many of the players involved will remember the jaw dropping quads over quads – Andrew Robl, Toby Lewis, Mike Sexton and Jesse May talk about this in a special post here: PartyPoker.com

** Aussie Millions qualifiers are up and running. Team Party pro Tyron Krost won the event last year and gives his own guide to satellites. PartyPoker.com **

Palladium VIP's - Spoil Yourself With As Many Presents As You Want From PartyPoker - Santa's Party Pack Open To All On PartyCasino!

Gibraltar – 30th November 2010 -- The festive season is drawing closer and PartyPoker.com is making sure they treat their most-valued players to a whole stack of presents. Palladium VIPs have the opportunity to pick up six presents and fill their very own Santa sack by just earning points by playing at PartyPoker.com’s online tables from the 1st to 14th December 2010.

A PartyPoker.com spokesman said: "The premise is very simple – Palladium VIPs earn points that make prizes. At the bottom end there is a $50 cash bonus, while 30,000 points delivers a $5,000 WPT entry. Players are entitled to keep all of the prizes they can win - so with six prize levels there’s six fantastic presents to keep!"

Here’s what’s on offer in the VIP Gift Accumulator:

Prize level Points required Prize Prize Draw tickets
1 1,500 $50 cash bonus 1
2 3,000 $100 cash 2
3 6,000 iPod Touch 4
4 12,000 $700 cash 8
5 20,000 16GB iPad 14
6 30,000 WPT entry 20

The feast of presents doesn’t just end here though. Every time a player hits a prize level PartyPoker.com award tickets for the VIP Gift Accumulator prize draw which offers the chance to win a share of $10,000. The more prizes a Palladium VIP earn the more entries they’ll get into the draw, giving more frequent players a better chance of winning the $5,000 first prize, the $3,000 second prize or the $2,000 third prize. Winners will be announced on the 17th December.

Please note that this is an OPT-IN promotion. For more information see: PartyPoker.com

Santa is also coming to PartyCasino.com. Unlike the poker promotion this is open to non VIPs too and runs from the 1st – 14th December, whether you have been bad or good. Points mean prizes including a luxury Caribbean holiday!

See: PartyCasino.com for more information.

Santa’s Party Pack

Prizes whether you’ve been good or bad!

Starts: 00:00 ET, 1st December
Ends: 23:59 ET, 14th December

Santa is making an early appearance. He’s spreading Christmas cheer, handing out killer Christmas presents to non-VIP and Palladium VIP players.

From 1st to 14th December, you can celebrate Christmas in style with a double whammy of festive winning opportunities. There’s a prize giveaway where you can scoop up to 6 prizes, and a massive cash prize draw!

Winning a share of Santa’s Party Pack is simple, and you don’t even have to sit on Santa’s knee! Simply opt-in between the 1st-14th December and collect points by playing your favourite slots and jackpot slots. The more you play, the more prizes you’ll unwrap.

Prize Giveaway

If you’re not a VIP yet, check out the Christmas List below, Santa could bring you up to 5 fantastic prizes worth $1,000:

Points Cumulative prizes
20 $5 cash bonus
100 300 points
500 $50 cash bonus
1,000 $100 free cash
5,000 iPad 32GB WiFi*

*The iPad 32GB WiFi has a cash alternative of $600, this will automatically be credited to your account. Please see T&C’s for details of how to receive the non monetary alternative.

If you’re a Palladium VIP player, check out the Christmas list below. Santa could bring you up to 6 prizes worth $10,000:

Points Cumulative prizes
2,000 $75 cash bonus
3,000 1500 points
5,000 $150 cash bonus
7,500 $250 free cash
15,000 iPad 64GB WiFi**
50,000 Luxury Caribbean Holiday**
(worth $8,500)

**The iPad 64GB WiFi has a cash alternative of $1,000, **The Luxury Caribbean Holiday has a cash alternative of $5,000 these will automatically be credited to your account. Please see T&C’s for details of how to receive the non monetary alternative.

Santa’s Big Prize Draw

What a cracker! But wait…there’s an extra present under the tree – Santa’s Big Prize Draw. By taking part in Santa’s Party Pack, you will be eligible for the draw. The more points you earn the more entries you will receive. Check below to see how much cash you can win:

Non-VIP Big Prize Draw

Every time you earn 20 points during the promotion, you’ll get one entry to the Big Prize Draw. $10,000 will be shared equally between 10 lucky players.

VIP Big Prize Draw

Every time you earn 500 points during the promotion, you’ll get one entry to the Big Prize Draw. $20,000 will be shared between 3 lucky players in the following amounts: 1st - $10,000, 2nd - $6,000 and 3rd - $4,000.

You can collect points on any of our slots and jackpot slots. To join the festivities you need to Opt-In from the 1st-14th December. Win some exceptional presents this Christmas with Santa’s Party Pack.

Good luck and Merry Christmas!

Media Man, Casino News Media and Global Gaming Directory do have a b2b relationship with PartyGaming, as they do with dozens of other companies in the gaming, igaming, media and entertainment industry.

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PartyPoker Introduces Five Star Poker Challenge

PartyPoker Introduces Five Star Poker Challenge

In December, PartyPoker will unveil the Five Star Poker Challenge, offering 31 freerolls worth $5,000 each plus other high-stakes cash prizes. PartyPoker offers some of the industry’s most unique promotions every month.

All you have to do to take full advantage of the Five Star Poker Challenge is rack up five Party Points in a single day. That’s it; that’s really all you have to do. When you amass five points, PartyPoker will grant you entry into a $5,000 freeroll the next day. There are 31 freerolls that will be held in total, meaning that the site is putting up over $150,000 for this part of the Five Star Poker Challenge promotion.

Now, if you qualify for five of the aforementioned $5,000 freerolls, you’ll score entry into a $50,000 freeroll that will be held on January 2nd. You’ll be ringing in the new year in style as you vie for a five-figure prize pool, all for playing on one of the world’s largest online poker sites.

In addition, repeat winners of the $5,000 freerolls will be in for a special treat. Win two daily $5,000 freerolls and you’ll take home a $5,000 cash prize. If you manage to win three daily freerolls, then your prize will be increased to $50,000. Finally, any PartyPoker player who manages to take down five daily $5,000 freerolls will win a colossal $500,000 cash prize.

Your $5,000 freeroll victories don’t have to be consecutive; rather, they can happen on any days during the promotion. Finally, PartyPoker is offering up one $5,000, $50,000, and $500,000 bonus, so start playing early to claim your prize, as jackpots will be paid out on a first come, first served basis.

Text found on PartyPoker’s website explains how bonuses can be claimed: “To make a claim, players must send an email to info@partypoker.com and confirm their account name. PartyPoker will respond to all claims within 48 hours in order to verify all claims and ensure no fraudulent play has taken place.” PartyPoker expects to pay out bonuses within 48 hours.

The $5,000 tournaments will kick off at 15:00 ET each day during the Five Star Poker Challenge. According to PartyPoker’s terms, a “day” runs from 00:00 ET to 23:59 ET, so make sure to pick up five Party Points during this time span to qualify.

Also in December, PartyPoker is holding the VIP Gift Accumulator for its VIP members. All players need to do is earn Party Points. Then, at certain thresholds, they’ll receive rewards for their play, ranging from a $50 cash prize to a $5,000 World Poker Tour (WPT) buy-in. Other prizes include $100 in cash, an iPod Touch, $700 in cash, and a 16 GB iPad, which will likely be one of the hottest gift items for the holiday season. All prizes are cumulative, which could make for a pretty full stocking come Christmas morning.

The VIP Gift Accumulator also includes a prize draw that will shell out $10,000. The top payout in the prize draw is $5,000, with cash sums of $3,000 and $2,000 also available. The VIP Gift Accumulator promotion runs from December 1st to 14th, with the prize draw occurring on December 17th. Players must opt into the VIP Gift Accumulator in order to participate.

The WPT buy-in is good for any event before March 31st. Players who would rather not head to a live poker tournament can opt for a cash alternative of $3,500. In order to check out how many VIP Gift Accumulator points you’ve earned, head to your PartyPoker account after you’ve opted in.

Visit PartyPoker for the full rundowns of the Five Star Poker Challenge and VIP Gift Accumulator. (Credit: Poker News Daily)

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PartyCasino Wins Media Man 'Online Casino Of The Month' Award

PartyCasino.com Wins Media Man Online Casino Award

PartyCasino.com has been awarded the Media Man and Casino News Media "Online Casino Of The Month".

PartyGaming's igaming suite has grown a custom to winning awards since they first opened for business in 1997.

The competition for the coveted award was intense again this month with massive bids from both WPTCasino.com, Captain Cooks Casino, Virgin Casino, Betfair, PKR and Noble Casino however there can only be one winner... ladies and gentlemen, that's PartyCasino.com

The award follows PartyPoker's EGR Poker Operator Of The Year and PartyGaming also made the shortlist for EGR Operator Of The Year. Recently PartyGaming's PartyPoker.com also won the Casino News Media "Online Poker Website Of The Month".

The Media Man - Casino News Media accolade is based on a combination of elements including user experience, innovation, trustworthiness, customer service, gameplay, affiliate program offerings, newsworthiness and company values.

PartyCasino.com is one of a number of PartyGaming brands.

The most popular PartyCasino.com games of late include Heist, Circus, Rambo, Palladium Slot, The Godfather, Sinatra, Slotbox, Call Of Duty 4: Modern Warfare, Mission: Impossible, The Terminator, Cleopatra, Sinatra, Thor, The Incredible Hulk, The Amazing Spider-Man, Monopoly, Resident Evil, Melon Madness, Wheel Of Fortune and Mega Fortune Wheel.

The PartyCasino.com jackpot is currently approaching the $2 million mark. Players can also compete for The Big One and Marvel Hero Jackpot, playing the Marvel super hero themed online slot games.

PartyCasino's most recent game releases include Shaaark! SuperBet, Crocodopolis, Alice's Wonderland, Glamour Puss, Super Cubes, Heist, Palladium Slot and Circus Slot.

PartyGaming CEO Jim Ryan has gone on record advising PartyCasino will soon feature more Hollywood blockbuster themed slots. A few in the know journalists and media agents have been recently tipped off that an all time classic movie adaption will be showcased in the PartyCasino portfolio within 1 month. PartyCasino has the world's most impressive line up of Hollywood themed games, and more are just around the corner.

PartyCasino.com and PartyPoker.com customers can also benefit from rewards and bonuses via PartyPoints and the Palladium Lounge. Be certain to check out the PartyCasino exclusive "Cash Machine" that is being championed as one of the greatest online casino promos ever.

Media Man, Casino News Media and Global Gaming Directory do have a b2b relationship with PartyGaming, as they do with dozens of other companies in the gaming, igaming, media and entertainment industry.

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PKR Poker Nominated For Casino News Media - Media Man - Global Gaming Directory Awards - November 2010

PKR.com nominated for Casino News Media - Media Man - Global Gaming Directory Awards - November 2010

Award winning online casino and online poker room, PKR.com, made the finals of the Casino News Media - Media Man - Global Gaming Directory "Online Casino of the Month" and "Online Poker Website of the Month".

The news comes as PKR enjoys a wave of momentum with a website revamp, more games, champion players flying the flag for PKR, and "Avatar" type technologies and sports betting on the way.

PKR also offer one of the world's most impressive new player sign ups and rewards systems.

For a unique poker and casino experience in 3D, check out PKR.com today.

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