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Saturday, August 20, 2011

Wynn Resorts May Purchase Bwin.Party Digital Entertainment, by Greg Tingle - 20th August 2011

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Earlier this year, PartyGaming and bwin merged to create Bwin.Party Digital Entertainment, which is traded on the London Stock Exchange under the symbol BPTY. In an news article that appeared in The Independent last Tuesday, it was noted that since the two online gaming giants merged, the combined company’s share price has dipped by nearly half. While part of the drop might be due to a slowing economic environment worldwide and so no action might be needed, other entities felt that an infusion could be in the offing.

The Independent added that Wynn Resorts, headed up by Steve Wynn, has emerged as a possible investor in the newly formed gaming giant, which is focused on the European market and continues to feature two separate online poker rooms. Readers will recall just before Black Friday in the United States, PokerStars and Wynn Resorts announced that, once a gaming license was secured in the United States, the two companies would team up to launch Poker Stars Wynn.

Following Black Friday, in which the founders of PokerStars were indicted on charges that included money laundering and bank fraud, the deal with Wynn was called off as you would expect.

The news outlet cautioned, however, that investors might wait for the gaming environment in the United States to be sorted out first: "Not everyone agreed with the chatter, however, with one trader saying acquisitions in the sector were unlikely until there was further clarification over the potential regulation of online gambling in the U.S."

On Thursday, shares of Bwin.Party closed at 106.50 in London. Other rumored "aggressors," as the Independent calls prospective investors, include William Hill, which is also publicly traded on the London Stock Exchange. Shares of BPTY stood above 160 pence in April, but have since dipped.

One poster on the TwoPlusTwo forum, questioned whether the rumors of a Wynn takeover were plausible: "So the newly merged Bwin.Party will sell to Wynn before even taking advantage of all the millions of Euros they will make in the first two years by virtue of the their merger synergies?"

Despite the merger, PartyPoker.com remains the flagship site of its own network, while bwin makes its home on the Ongame Network alongside rooms such as Betfair.

Caesars Entertainment, one of the principal competitors of Wynn Resorts, has partnered with 888, also a publicly traded company in London. Prior to Black Friday, Full Tilt Poker teamed up with Fertitta Interactive, whose ownership group has strong ties to Station Casinos. Along with the PokerStars - Wynn deal, the latter fell by the wayside once the U.S. Department of Justice took action in April.

Other members of TwoPlusTwo continued to cast doubt on the validity of The Independent’s report. One player wrote, "Party has never had any interest in selling. This feels like an absolute recycle of the previous such rumor that they were going to be bought out by Harrah’s. Unsurprisingly, it turns out there was never such a thing on the table and the only connection was former Party CEO Mitch Garber moving to Caesars Interactive."

Rumors have also persisted that the Ongame Network could be sold outright. To that end, Sharecast.com noted in a recent article, "Bwin.Party, the world's largest online gaming group, already has its poker network, Ongame, on the auction block. The sale is expected to generate between 20M and 30M Euros ($28.5m to $42.7m), a modest figure reflecting the loss of players the network will incur through the sale."

But could a deal between Wynn and Bwin.Party be finalized before online poker is legalized in the United States? And will it matter? This week, the New York Post published an article stating that online poker legislation could be coming sooner rather than later. One source told the Post, "I think there is becoming a feeling in Congress that this is something that needs to be regulated and be done. I believe there is a possibility a bill will pass towards the end of the year."

Media Man will be following the story with weekly reports.

*The writer has conducted b2 with Bwin.Party Digital Entertainment and Betfair.

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