The online gambling company Bwin.Party reported an income drop of 6.5 percent during the first six months in 2015, making only £217.5. Bwin officials say the loss in profits is due to hard-hitting comparatives from 2014, as then the company had higher profits due to betting on the Fifa World Cup.
However, if Bwin’s profits are adjusted based on last year, their profits have actually increased two percent, making a gain of £2.1m from losing £69m the prior year.
Bwin plans adding new tools to raise profits
According to their chief executive, Norbert Teufelberger, investors can expect that the company has a great outlook for the total profits by the end of the year, since they are rolling out new mobile products, and introducing brand new CRM tools, as well as planning to enter into two brand new nationwide regulated markets later on in 2015.
Additionally, Bwin had a very good leap in their profits in the first six months of 2015 from the non-core divisions even though their own labeled sales went down.
Bwin rivals start bidding wars
The most recent report comes during bidding wars to try to buy Bwin. Two of the company’s rivals, 888 and GVC Holdings put in bids to try to buy the company, but it was reported July 17 that Bwin had accepted a conditional offer from 888 for £900 million, even though GVC has previously offered them £1.03bn. Amaya Gaming Group was also prominent in the bidding but lost out in their attempts to buy the company or garner any additional interest.
Bwin tried negotiating with GVC to get a higher offer so it could go all in regarding the purchase, and GVC allegedly offered to go as high as £1.1bn so they could attempt to build one of the world’s top online gambling and entertainment businesses.
The prospective deal would be an example of the surge of consolidation now happening in the betting business as two other rivals, Paddy Power and Betfair approved a £5.6bn merger previously this week.
It’s known that GVC and 888 have been fighting over the chance to purchase Bwin in the past with other offers close to £1bn being previously mentioned in the past. 888 would get the company, including the well-known PartyPoker brand, which is said to be worth at least $1.4 billion. 888 is said to have the second largest online poker network in existence, according to PokerScout.
888, GVC have different reasons for wanting Bwin
It seems that Bwin may actually prefer GVC over 888 despite accepting 888’s bid for the company, even though they had supposedly already agreed to the previous bid by 888. Nonetheless, gambling experts claim that isn’t true and that Bwin doesn’t really care who takes the company over and that it wouldn’t affect the company’s client base. Instead, it would get many other clients via the markets in Germany, Italy and in Spain.
It was explained too that 888 and GVC each want to own Bwin for different reasons. 888 is said to want Bwin in order to get its sports book since they don’t have such technology of their own, while GVC is interesting in getting more balances and more clients by buying Bwin.
Mergers common in betting industry
Mergers are nothing new in the betting industry, in fact Bwin.Party came about from the merger of PartyGaming and Bwin Interactive Entertainment AG in 2011. Companies are banding together in order to stay in business because European regulations have caused changes in current gambling laws and have raised taxes on gambling businesses.
Mergers help the industry to not only survive, but to make gains and overcome the existing challenges to making a profit and staying in business. Other top profile level mergers have included companies like Betfair and Paddy, as well as Gala Coral and Ladbrokes. Even smaller businesses are choosing to band together too such as Contagious Gaming and Sportech, and the two companies FandDuel and NumberFire.
Watchdogs monitor for any competition breaches
Largely, in some markets such as oil and gas the regulation is so strict that there are special watchdogs to monitor any competition breaches. However, according to experts, this is not true of the merger expected between Bwin and GVC. This is due to the fact that there isn’t any competition being caused by the merge and no one place’s acquisition will cause the creation of a monopoly. Even so, there are gambling regulators all over Europe and permission for the merger has to be approved by each one.
Stocks rise after merger agreement
After the merger agreement between 888 and Bwin, 888’s share price on the stock market rose, while the stock shares for GVC went down five percent, and they had already seen their stocks go down almost three percent in 2014. This caused GVC to be the company that placed third in the list of the biggest losers in the Alternative Investment Market.
Bwin’s share prices also went up when the merger deal got announced, however, as fast as it went up, the stock prices then plummeted and they lost four percent in their stock prices.
Counter merger offers being made by GVC, 888 to win Bwin
As if the middle of August, GVC was said to have put in a bid for the merger of $1.72 billion to try to outdo 888 and acquire the company from them and outdo 888’s 1.4 billion dollar bid. There are also rumors spreading that 888 would be given a chance to come up with additional counter bets to try to win the Bwin company and create a merger of the two groups.
Time will tell which of these gambling groups are successful and how the new owners of Bwin will fare in the online gambling businesses.