Bwin.Party Financials Strong, But Online Poker Continues to Struggle

August 31st, 2015 | by Greg Shaun

bwin.party financials online poker 888 GVC Norbert Teufelberger

Though not always the most popular of CEOs, Norbert Teufelberger has been at the helm of the bwin.party revenue turnaround and now his company is properly positioned to return its poker platform to its earlier days of glory. (Image: Foltin Jindrich)

Bwin.party is profitable once again, announcing it made a return of €2.9 million ($3.25 million) after taxes for the first six months of 2015, an impressive turnaround for the company which lost a staggering €94 million ($105 million) during the same period last year.

Through cost-saving initiatives and the selling of non-core assets including the offloading of the World Poker Tour brand to Chinese firm Ourgame for $35 million, bwin.party has performed a miraculous change of direction.

“Based upon our progress in the year-to-date and with the further roll-out of our latest mobile products, the introduction of new customer relationship management tools and planned entry into two new nationally regulated markets later this year, we remain confident about the full year outlook,” Norbert Teufelberger, bwin.party CEO said.

The company’s resurgence is why both 888 and GVC Holdings are actively trying to acquire the Gibraltar-based gaming company, and while 888 is thought to still be the frontrunner, GVC isn’t ready to wave a white flag at the battle for bwin.

Poker Still Poor

As remarkable as bwin.party’s drastic revenue transition is, another key area of the Q1-Q2 data is the persistent struggles of online poker.

In 2013, Internet poker was responsible for nearly 17 percent of bwin’s total revenues.

In 2014, that dropped to under 13 percent, and of the $332 million bwin grossed during the first six months in 2015, poker accounted for just $38 million, or 11 percent.

Once a marquee component of the PartyGaming and bwin merger, online poker is in serious need of revitalization, and reviewing bwin.party’s Key Performance Indicators shows just how drastic revenues have dropped.

In the second quarter of 2010, the company’s online poker network grossed about $650,000 per day. Five years later, the Internet rooms are bringing in less than $200,000, a more than 70 percent decline.

888 Could Help Poker Product

The bwin board of directors has recommended to shareholders that the company accept 888’s proposal for acquisition over GVC’s, even though the former’s bid is lower than the latter’s.

A primary reason for accepting a cheaper offer is due to 888’s strong position in online poker.

“The combination of the 888 and bwin.party businesses would generate significant value for both sets of shareholders,” bwin explained in a release to investors. “The Board continues to believe that its offer is significantly greater intrinsic value than the proposal outlined by GVC Holdings.”

Mergers and acquisitions has certainly become the name of the game when it comes to iGaming. Stricter tax regulations and prolonged constraints by governments has led to $9.1 billion in corporate deals in 2015 alone, the latest being Paddy Power and Betfair.

“To maintain dividends and create scale, the market is having to consolidate. The market is ultra-competitive,” Warwick Bartlett, a research executive at Global Betting and Gaming Consultancy told the Irish Independent.

Once the largest online poker room in the world, PartyPoker could make a serious run at regaining that title it lost to PokerStars following the 2006 Unlawful Internet Gambling Enforcement Act should it align with 888.

That chance simply doesn’t exist with GVC, which is why bwin.party is expected to announce it’s taking the offer from 888.