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Saturday, March 27, 2010

PartyGaming Eyes French With PMU Deal; Global Strategy Sees Punters And Government's Win, by Greg Tingle - 27th March 2010

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PartyGaming is aiming to take advantage of the newly regulated online gambling market opening up in France by inking a deal with Pari Mutuel Urbain (PMU) to provide an online poker offering to the French horse racing betting group.

The deal which is understood to be similar to b2b agreements PartyGaming has signed in Italy and Denmark, enables the company to operate its world famous PartyPoker website – provided it wins a licence in the regulated market – as well as power PMU’s poker offering.

Players on both sites will be brought into one poker liquidity pool.

Jim Ryan, PartyGaming’s chief executive, said the company intended to strike other B2B poker deals in France. "The objective is to have the largest poker liquidity pool in France," he said.

PartyGaming declined to disclose terms of the deal. PMU, which has signed up Paddy Power as its partner in sports betting, last year made turnover of €9.3bn and has 6.5m customers.

Wyn Ellis, analyst with Numis, advised the deal could add £5m to 2011 earnings before interest, tax, depreciation and amortisation. "Party has a scale that has allowed it put people and resources into multiple markets to allow it to exploit the changing regulatory environment," Mr Ellis said.

Burt Paul Leyland of Collins Stewart said while the deal would give Party a leading place in the French market, it would not obviously drive revenue.

PartyGaming would have to absorb the loss of revenues coming out of France in the unregulated market, he said, adding that, given the proposed tax rates in the new regime, "Party could easily still be a net loser".

Ryan remains upbeat and positive, emphasising revenues coming out of France were small and that the opportunity for PartyGaming to advertise in France was crucial. "I don’t share the view that we can expect ebit margins to shrink," he said.

France plans to open the new market in time for the start of the World Cup in June. Under the new regime, the PMU is protected by regulations that require bets on horse racing to be pari-mutuel, but fixed-odds betting is allowed on sports.

PartyGaming's global strategy continues to take shape. A return to the United States this year, or next, would likely be the firms jackpot, however they continue to make progress in many regions. Other countries that Party are keen to expand into include Australia, India and South America.

The company's amicable settlement with the U.S Government last year, exceeding $100m, is tangible proof of financial stability and willingness to go the extra mile as to adapt to the market, while satisfying crucial legal requirements. Party's financial strength and positive result for the United States coffers has not gone unnoticed by Government bean counters across the globe. Clearly Party have far greater resources and experience than most of their would be competitors. Mainstream brands Virgin (Games) and Sega are also looking to expand internationally, but in the case of Virgin its more of a non gambling product push. In the eyes of most media and gaming analysts, PartyGaming is way ahead of the pack, with only Harrah's Entertainment giving them a real run for their money in the U.S.

Ryan sees a number of mergers and acquisitions on the cards. Industry buzz of late is that Party may be about to secure a deal with a major Canadian based poker tour brand, and such a deal would add to Party's poker tour portfolio headed up by the World Poker Tour.

"With some acquisitions and major B2B deals already under our belt, we plan to do more in 2010 and I believe we are on course to meet our objective of becoming the world's most valuable online gaming company."

PartyCasino.com remains a big hit for Party and its customers, with Hollywood branded games such as the Sinatra slot, Rambo, The Terminator, Mission: Impossible and Saturday Night Fever enjoying record popularity. The deal with Marvel Entertainment also continues to serve Party, its partners and customers well, and let us not forget upcoming Marvel films, Thor and Spider-Man, that will further propel the Hollywood themed games.

Party is also utilizing the strength of other world class non gaming brands to stand out from the pack. This month PartyCasino players have a chance to win a Porsche playing slot games, a promotion most other competitors would die for.

Australians can currently play virtually all PartyGaming brands including PartyCasino.com, PartyPoker.com, WPTCasino.com, WPTPoker.com, PartyBingo.com, PartyGammon.com and PartyBets.com

Shares in PartyGaming rose ½p to finish at 329.3p on Friday.

*The writer has a b2b agreement with a number of PartyGaming brands, as they do with dozens of companies in the gaming, media and entertainment sector.

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