The Betting Line: Amaya Likely to Purchase bwin.party Poker Units in 2016
Last week’s acceptance of a sweetened bid from London-based GVC Holdings Plc for the moribund bwin.party operations isn’t likely to be the last word on the deal. Though it’s unlikely you’ve missed it, GVC won a months-long bidding war for bwin.party over 888 Holdings, offering £1.1 billion (or about USD $1.6 billion) in a cash-and-shares deal.
GVC itself, despite its ownership of the SportingBet brand, is much the smaller part of this deal. It’s officially a reverse takeover, but when the deal is finalized, GVC will be taking over the Party and bwin brands, including operations in every important marketing segment, from sports betting and online casino games to online poker.
GVC succeeded in its winning bid for bwin.party only after it eliminated an earlier financing partner — Canada’s Amaya Gaming, the parent company of online-poker giants PokerStars and Full Tilt. Amaya bowed out of the financing deal, to be replaced by New York-based Cerberus Capital Management, a distressed-equity investment company.
But don’t look for that to be the end of the story. Though Amaya bowed out of the picture in allowing GVC to put together a repackaged deal, it’s likelier than not that when the ink on the bwin.party deal is dry, the PartyPoker and bwin Poker units will quickly be spun off and sold, lock, stock and barrel, to Amaya.
It’s interesting to note that the quotes emanating from GVC’s corporate offices continue to talk about sports betting, bingo and other things, but never the word “poker”. Here’s the press quote provided by GVC in the context of the deal announced last week:
Commenting on the Offer, Kenneth Alexander, Chief Executive Officer of GVC, said:
“GVC is the natural partner for bwin.party considering our strong sports betting and online gaming pedigree. Sports betting is in our DNA and leveraging GVC’s experience of successfully acquiring and restructuring online gaming businesses, notably Sportingbet in 2013, we look forward to merging the two operations to deliver long term value for combined shareholders. GVC has been working closely with bwin.party’s management and has identified many talented individuals with whom it looks forward to working to ensure the future success of the enlarged business.”
No mention of the p-word there. But it does meld quite nicely with Alexander’s thoughts from July, back when he spoke with Reuters and when Amaya’s co-investment with GVC was still part of the deal. As Alexander told Reuters at that stage, “From the GVC perspective, one that excites me the most is Bwin’s sports betting brand and that’s the brand with enormous potential.”
If one imagines that PartyPoker and bwin Poker are being repackaged as we speak, then that means that very little has changed. GVC’s margins on the deal appear to be tight, and PartyPoker is the largest money-spewing albatross of the whole package deal.
Amaya, though, wouldn’t want Party for its existing European operations as much as for its existing license in New Jersey, the most populous of the three US states where real-money online poker is regulated. Amaya’s own PokerStars brand remains in an unofficial limbo there as imposed by New Jersey Governor Chris Christie… allegedly at the behest of anti-Stars and anti-online-gambling casino magnate Sheldon Adelson.
But if Amaya purchases the PartyPoker brand outright, it gives them the means to outflank Christie and Adelson and crack that unofficial gridlock wide open. It would mean either licensing Amaya’s brands, which would then include both PokerStars and Party, or forcing New Jersey’s existing sites into something of a monopoly serviced by 888. That’s unlikely, no matter how much Sheldon screams.
Lots of people are thinking that way in behind the industry’s curtains, even of only a few are stating it openly. Take the GPI’s chief, Alexandre Dreyfus. who asked the following on Twitter:
— Alexandre Dreyfus (@alex_dreyfus) September 4, 2015
Dreyfus also quoted GVC CEO Alexander, who said the following to British financial outlets after the winning bwin.party bid was confirmed: “We plan to grow all parts of bwin business but will of course consider any attractive opportunities to dispose of some.” Or, as Dreyfus translated:
That fired up a brief exchange between Dreyfus and Steve McLaughlin, the online guru behind PokerTracker and a man with connections inside many major online-poker firms. Replied McLaughlin:
— _tizzle (@_tizzle) September 4, 2015
Except McLaughlin isn’t hiding much of a secret at all. Of course Amaya will be interested. It’s only a matter of when and for how much, because they’re the only ones who would really want the stinky PartyPoker operations right now for any price whatsoever. That said, the price might still be hefty — £300 million to £400 million, perhaps — but only because GVC can likely extract that much from Amaya for what’s at stake.