Net Bet Blog

Are BWIN about to pull off a very good deal and get involved with buying Newcastle United?

Newcastle are a massive club that are going cheap. BWIN need a higher UK presence. They are big in Europe but small in the UK at the moment. This would certainly help. Sportingbet have Wolves and other betting companies are involved in premiership sponsorship.

This could be a very good move.

bwin Named in Newcastle United Takeover Rumours [Gaming intelligence]

There is increasing speculation in the UK that online gaming operator bwin is putting together a £100 million package to acquire Newcastle United F.C, one of the most fervently supported football clubs in the UK. The club was put up for sale by its owner Mike Ashley in the wake of the club's relegation from the Premiership in May.

A group of bwin executives are said to have been shown around the club's St James' Park stadium earlier this week, according to The Guardian newspaper, after the company initially made contact with the club to enquire about a possible shirt sponsorship deal in place of incumbent Northern Rock.

A move by bwin to purchase the club would be a significant statement of intent by a company that is renowned for sport sponsorship deals, especially within the football market, with the company having a number of shirt sponsorship agreements already with top football sides including AC Milan and Real Madrid.

bwin could however just be interested in the club as a 'bargain' deal on offer. Sportswear tycoon Mike Ashley paid £134 million for the club two years ago and has since injected up to £110 million of his own money to pay off some of its debts.

However a disastrous spell in charge of the club, including a series of protests and demonstrations following Kevin Keegan's departure as manager, culminated this year in the club's relegation to the Football League Championship for the first time in 16 years. Mr Ashley initially put the club up for sale for £400 million last September but following the club's departure from the top flight of English football, the value of the club has since plummeted.

A quick return to the Premiership could see the value of the club rise again however and with the Toon Army fans said to be the most 'loyal' football supporters in England, the club still maintains the third highest capacity football stadium in the country with over 52,000 seats.

Newcastle United FC said that it has received two offers of at least £100 million this week for the club, with a Malaysian consortium and former club Chairman Freddy Shepherd also said to have had discussions with the club. The identities of the bidders have not been disclosed since all parties have signed non-disclosure agreements before being granted access to the club's financial accounts.

This news came as rather a shock. I am surprised Paypal have gone down this route and it clearly has implications for Neteller and others.

When did ebay change its policy? Why did I not know this before?

This could be a major boost for European gaming companies.

32Red online casino accepts PayPal [Casino Portal]

Casino, based in Gibraltar has just announced that they will be accepting deposits and withdrawals from PayPal. This new payment method adds to the numerous banking options available at the site already.

PayPal is one of the preferred online payment services with a market share of 21% in the UK. PayPal offers safe and fast payments to more than 73 million active account holders worldwide in 19 different currencies. PayPal is regarded as the fastest and easiest way to pay online. The addition of PayPal to 32Red’s casinos will make it easier for the players to deposit and withdraw money from their gambling accounts.

Pat Harrison, Operations Director at 32Red said: "32Red strives to make joining and playing our gaming products as simple and as convenient as possible. The addition of PayPal to our banking methods will allow players to manage their finances, deposit and withdraw easier than ever before. We're positive that our strategic alliance with PayPal will also mean we will introduce more new players to our Best Casino service this year"

PayPal operates directly out of bank accounts and from funding from credit cards. The players can buy chips at the casino without giving away any details about their personal bank accounts. Any winnings will be paid back to the player’s PayPal account, where it can be withdrawn to the player’s bank account. PayPal is considered by many as the preferred online digital wallet. Before PayPal was taken over by eBay, it was actually the number one choice in the online industry, but eBay prohibited the service to be used to fund online gambling – this has now been changed again.

On the London Stock Exchange 32Red Plc is listed under the ticker TTR. 32Red Plc runs 32Red Online Casino, Dash Casino, 32Red Poker and 32Red Bingo.

Another good deal for Playtech the picks and shovels gaming company. A separate placing my Netplay is also good news for them as the shore up their balance sheet.

It will be interesting to see how Liveplay takes off but Playtech are well positioned to benefit from any growth (which could be substantial).

Both companies are now more attractive to buy although only Netplay's share price has reacted positives (not surprising given the relative market caps).

12.8m Placing and Playtech agreement [ADVFN]

NetPlay TV Plc (AIM: NPT), the 'live' interactive TV gambling specialist, today
announces that it has conditionally placed 58,352,476 new ordinary shares
("Placing Shares") of 5p each at a price of 22 pence per share, raising gross
proceeds of GBP12,837,545 (the "Placing"). The proceeds will strengthen the
Company's balance sheet and provide capital for future growth.

In addition, the Company has entered into a memorandum of understanding with
Playtech Limited ("Playtech") that has set the term of the agreement for the
supply of 'live' interactive games to the Playtech network to five years.
Playtech is the world's largest publicly traded online gaming software
supplier. Distribution will be via both Playtech's online customers and retail
clients. NetPlay TV will supply a number of 'live' games including: Live
Roulette, Live Blackjack, Live Bingo and a Live Fixed odds draw. As part of the
agreement, NetPlay TV will migrate all of its services onto the Playtech
technology platform, this agreement will also run for a period of five years.

The New Shares, which will be placed with investment company Directforce Trading
Limited ("Directforce"), will represent approximately 29.9 per cent. of the
Company's Enlarged Share Capital. The beneficiary of Directforce also has a
beneficial interest in a significant shareholder of Playtech Limited.

The Placing is subject to the approval of the Company's shareholders at a
General Meeting. A circular convening the General Meeting will be sent to
shareholders shortly.

The Company has received irrevocable commitments from certain shareholders
representing 43.4 per cent. of the Company's current issued share capital to
vote in favour of the resolutions to be proposed at the General Meeting.

Martin Higginson, CEO of NetPlay TV plc, said:

"This agreement will take NetPlay TV to new heights. The investment of GBP12.8m
into our business, along with the strategic relationship, both in terms of
distribution and technology with Playtech, will enable us to drive the
development of our converged gaming solutions.

"'Live' gaming is being demanded by more and more customers and this agreement
will allow us to deliver our products to a much wider audience."

Mor Weizer, CEO of Playtech Limited, said:

"We have been looking for a partner in the 'live' interactive gaming market for
some time. Our clients and their customers are demanding 'live' products and
therefore it is logical we offer them the best services available. This
agreement enables us to offer our licencees unique TV quality gaming shows, this
will also enrich their offering to gamers, and will also boost Playtech's Bingo
offering, increasing Playtech's bingo network liquidity significantly.

"We are extremely happy to partner with NetPlay TV Plc who are the clear leader
in 'live' interactive gaming. We see this agreement as a natural step in
Playtech's business strategy of entering into the interactive TV gaming market
and further supplements the acquisition last year of interactive
mass-multiplayer live gaming assets.

"We believe 'live' gaming is going to be very big in the coming years and, as
such, a significant investment in this business makes perfect sense."

iMEGA are persistent. With the funds from the gambling industry they are dedicated to ruling UIGEA as unconstitutional.

The implications for European quoted companies is still not clear. US entry remains a distant dream and all this could do is bolster Fulltilt and Pokerstars.

There is no doubt that a positive result (due in 30 days at best) would send stocks flying. It might be worth taking some positions ahead of the result. Limited downside and strong upside.

Third Circuit Court of Appeals Hears iMEGA UIGEA Case [Poker Daily]

On Tuesday, lawyers from the Interactive Media Entertainment and Gaming Association (iMEGA) argued in front of the Third Circuit Court of Appeals in Philadelphia. The objective: prove that the Unlawful Internet Gambling Enforcement Act (UIGEA) is unconstitutional.


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One of the central issues discussed by the trade organization and attorneys for the United States Attorney General’s Office was where a bet placed online actually occurs. iMEGA Executive Director Joe Brennan explained, “We argued that the bet took place in another country like Costa Rica. When a person enters into a bet, it comes from an account already placed on the site.” However, it could be argued that bets originate on a person’s computer, on a server, or somewhere along the way in cyberspace.

Also at the forefront of the debate on Tuesday was whether iMEGA had standing to sue, something Brennan noted was preserved at the District Court level. iMEGA has online poker sites and individual players as members. Brennan recalled, “There was a ruling from the Third Circuit that concluded whether or not third parties could come forward if members were harmed, but [U.S. Attorney General counsel] Nicholas Bagley wasn’t familiar with it.” On his overall impressions, Brennan admitted, “It’s tough to tell. The three judge panel spent a lot of time with us. They didn’t spend as much time with the Government’s attorneys.”

Also questioned was whether it would have been advantageous for iMEGA to find an internet gambler who was harmed to appear in court. It’s a similar quandary that the Poker Players Alliance (PPA) has found itself in with regards to the online poker funds seizure in New York. In essence, anyone who stepped forward would be required to testify under oath that they played online poker. Brennan noted, “We said that, per the language of the statute, a person would essentially incriminate themselves in order to challenge the UIGEA. While there are no criminal sanctions, there are civil penalties for players.”

Judges Dolores Sloviter, Thomas Ambro, and Kent Jordan listened to attorneys for iMEGA and the Federal Government on Tuesday. The panel will now deliberate and return one of a wide variety of verdicts. One of the questions posed concerned the status of bills to license the industry in the United States and delay the implementation of the UIGEA’s regulations. Both were introduced on May 6th and referred to the House Financial Services Committee. HR 2266, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act, is up to 40 co-sponsors. HR 2267, the Reasonable Prudence in Regulation Act, has attracted 23 co-sponsors. Neither has been scheduled for mark-up or discussion on the floor of the House of Representatives. One possible outcome is the Third Circuit deferring a resolution until Frank’s bills are acted on.

Many in the industry are now scrambling to ascertain when the Third Circuit will hand down a decision. Brennan revealed that the court’s average turnaround time is three months and iMEGA does not expect to hear back in the next 30 days. At the District Court level, the organization was left in the dark for nearly six months.

In the meantime, iMEGA will turn its attention to the Commonwealth of Kentucky, where briefs were filed to the state’s Supreme Court in May. To open the year, the Kentucky Court of Appeals in Louisville overturned a lower court ruling by a two to one margin and asserted that the Commonwealth did not have jurisdiction to seize 141 internet gambling domain names. The State quickly appealed. There has been no word on whether the Kentucky Supreme Court will take the case.

Will governments never learn? Online gaming cannot be stopped only regulated.

This time Norway are trying to protect their monopoly. This is ultimately doomed.

Norway appear to be trying the US financial transaction route. We don't need to go through all the arguments why it will fail but a quick look at the amount of money that Fulltilt and Pokerstars have made should be enough evidence.

Norwegian Online Gambling Threatened [Online Casinos]

The European Union has yet another country trying to protect it's gambling monopolies within their borders. Norway is expected to apply new laws in August of 2009 that will restrict and prohibit financial transactions to online gambling operators.

The EFTA Surveillance Authority (ESA) has decided to file a reminder to the Norwegian government that such actions constitute a violation of the free access to the internal market for gambling services. A prohibition will be implemented on the processing of payments related to gambling via debit and credit cards, bank transfers and e-money. Only the state-owned monopolies Norsk Tipping and Rikstoto are exempt from the new legislation. The proposed laws also prevent holders of Norwegian credit or debit cards from using these payment methods for gambling while travelling or residing abroad where such gambling activity may be legal.

The Remote Gambling Association's, Chief Executive Officer, Clive Hawkswood, said, "It is difficult to believe that the aim of the proposed measures is to protect consumers and restrict gambling given the Norwegian monopoly’s appetite for recruiting new players and the extent of its marketing campaigns," He added,"The Norwegian authorities appear to be more motivated by the need to protect revenues from gambling, but this is not a valid justification to restrict the internal market rules. Norwegian consumers should have a right to chose from responsible gambling operators licensed in the EEA States, which are at present subject to discriminatory measures. "We hope that the implementation of the regulations is delayed and that the new Norwegian government in September (after the September 15th national elections) are prudent enough to revisit this issue as so many other European States have in creating access to markets,"

The main goal of the EFTA Surveillance Authority is to ensure that European Economic Area rules are properly enacted and applied by the European Free Trade Association (EFTA).

GVC yesterday announced their long awaited Latin America venture. For the princely sum of $4 million plus a 3 year earn out (capped at $30m) GVC have bought Betboo.com based in Brazil.

Betboo currently has 3000 active monthly players. This is not that many in the grand scheme of things. Does this warrant a price tag of $4m?

What are they going to do with it to expand numbers? Entering foreign markets is not easy. You have to insert someone into Brazil and pay them. You need to learn how to "market" successfully in another country and the time difference can make day to day management difficult.

In terms that economists would understand this purchase represents a brown field investment and not "green field" where a business is set up from scratch.

Is $4m plus earn outs a lot for 3000 players and a lot of potential?

For GVC there are benefits from diversification away from their German high rollers. It will also boost cash flow and make GVC themselves a more attractive proposition.

I am still a little wary of the GVC management. They say little but do get things done. Is there any possibility of another management buyout attempt on the cards?

GVC is a favorite of this blog because I still fail to see as an economist and investor WHY the share price is operating on such a low PE. Sure there is regulatory risk but my felling is that it is overdone.

I keep looking for good reasons not to invest and cannot find a good one. This Latin adventure is neutral in my mind. Time will tell but netbetblog will be watching carefully. The arguments expressed at the end of this RNS make sense to me. Broadband penetration, a love of sports etc.

Latin American Acquisition [ADVFN]

Gaming VC Holdings S.A. (AIM: GVC), a leading European online gaming company, is
pleased to announce that it has acquired the business and assets of betboo.com,
owned by Intera NV ("Intera"), for an initial consideration of US$4 million in
cash plus a three-year earn out.

Betboo was established in 2005 to provide Bingo, Sportsbook, Casino and Poker
access to South American customers. Intera was incorporated and is regulated
under the laws of the Netherlands Antilles and has never taken wagers from US
residents.

Betboo has over 3,000 active monthly customers and, for the 12 months to 30 June
2009, generated unaudited revenues of $4.4 million and has achieved break-even
at the profit level. The business has no employees, instead having service
contracts with third party companies supplying Customer Relationship Management
and IT support. The business has its own software for Bingo and Sportsbook and
uses third-party software for the Poker and Casino networks.

The senior management team, comprised of the three people who were also the
majority owners of the business, are to remain with betboo post the acquisition.

The total consideration, which is capped at US$30 million and is payable in
cash, will be calculated by reference to five times the audited profits after
tax for the 12 month period up to the third anniversary of the acquisition less
the initial consideration and any interim payments. Interim payments will be
paid shortly after the first and second anniversaries of the acquisition
equating to one times audited profits for the preceding 12 month period.

Commenting on the acquisition, Kenny Alexander, Chief Executive of Gaming VC,
said: "This acquisition complements our strategy of continuing to diversify
outside of Germany. The Board believes that South America represents an exciting
market opportunity. With a population of approximately 285 million, many of
which are passionate about sports, and increasing broadband penetration, we are
confident of significantly increasing betboo's presence in this new territory
for Gaming VC."

Partygaming really are listening. Perhaps someone over at PRTY is even reading this blog because they are finally implementing some very basic ideas that have worked on other sites.

To compete with Fulltilt they have to match Fulltilt on the following:

1. Liquidity - not far behind and they do have enough players and tables

2. Table structures - Partygaming need to keep the Jackpot, deep stack and speed tables. PRTY are doing OK on this front although the software could "look better".

3. Academy. JUST set up recently. This is an important addition. Cardrunners and STOX have been successful but bringing in house and offering a free service is a very good idea. PRTY NEED to be seen to be helping players. PRTY need players and not losers. By training up more players they will play for longer and generate larger profits. An academy gives the impression that the site is on the players side. PARTY are again very late to the PARTY but at least they get there in the end.

4. Sign up Professionals. See previous post. PRTY have FINALLY seen the sense it this. It is again essential that they do this to keep up with Stars and Fulltilt.

Click here to see the academy is action. It will take a while to get up to a workable number of videos etc. but they have to start somewhere.

PARTY ACADEMY

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