PartyGaming seals first US deal since settlement

As the US moves to legalise online gambling, PartyGaming is homing in

Nick Clark
Wednesday 26 August 2009 00:00

PartyGaming has struck its first deal in the US since agreeing a $105m (£64m) settlement to avoid prosecution, with the acquisition of a TV producer specialising in poker, but remained cagey over further plans to return to the market.

The Gibraltar-based company yesterday announced it was to buy WPT Enterprises – known as World Poker Tour – for $12.3m. The deal also included a revenue sharing agreement that will see it pay out at least $3m to WPT's owners for the next three years.

A spokesman for the group said: "PartyGaming has had a long association with WPT, and we think this deal marks a great combination of two global brands."

WPT, which is based in the US, televises poker tour shows aired and licenses consumer products, branded merchandise and operates a small subscription online gaming site. PartyGaming is WPT's largest customer, and it made up about a third of its revenues for the first half of the year.

The PartyGaming spokesman said: "Mergers and acquisitions are still very much a part of our strategy, we've been saying for several months that the industry is ripe for consolidation."

The group settled a dispute with the US Department of Justice in April, following a two-year legal battle. It agreed to pay $105m over three years to avoid prosecution for providing internet gambling before the activity was banned three years ago.

George Bush's government introduced the Unlawful Internet Gambling Enforcement Act in October 2006, effectively banning online gambling, although some activities were exempt.

The law is expected to be repealed by the Democrat-controlled congress as early as this year. The move could prompt a rush to the world's largest gambling market, although one analyst said gambling remained a "legal minefield and the US might still block European operators from piling in".

"We have made no secret of our desire to enter the US as and when it is possible. At the moment there are no concrete plans as, for the most part, you can't currently provide internet gambling there," the spokesman added.

Nick Batram, a gaming analyst at KBC Peel Hunt, said: "While this is not a significant transaction financially, it is certainly strategically very interesting. WPT is a media company, but it has bricks and mortar presence in the US. If the market opens up it could be an interesting distribution platform."

WTP marks PartyGaming's second deal since the settlement. It bought bingo website Cashcade, which was 18 per cent owned by Independent News & Media, the publisher of The Independent, last month for £71.9m.

Many in the industry expert a landgrab in the industry in the coming months. On Monday, it emerged that Betfair had hired investment banking group Credit Suisse to advise on acquisitions, especially looking at opportunities in the US. The group is also understood to be looking at a listing.

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