Analysts Suggest Casino Mergers may be Dependant on US Online Gambling Issues
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Financial analysts have suggested that the future of gambling companies such as Sportingbet and 888 will rest on their relationships with the US Department of Justice. In the wake of PartyGaming’s merger with Bwin, both 888 (which owns the likes of 888 Casino) and Sportingbet (a global online bookmaker), have been identified as potential investment targets by those keen to crack the US gambling market. However, according to an article published by Reuters, both 888 and Sportingbet will first have to resolve any outstanding issues with the Department of Justice, if they wish to consolidate with other gambling companies.
Online gambling is currently illegal in the United States and in 2009, PartyGaming agreed to a penalty payment of $105 million, after admitting to “targeting” US casino players up until October 2006. The agreement meant that the Department of Justice would not prosecute PartyGaming for previously allowing US players to wager at their online casino, bingo and poker websites. The settlement also means that, if online gambling is legalised in the United States, PartyGaming will potentially be allowed to re-enter the market.
Nick Batram, of KBC Peel Hunt, has proposed that bookmakers such as William Hill and Ladbrokes may be interested in purchasing SportingBet. However, Baltram also noted that if Sportingbet were to settle with the US, the potential level of debt from such an agreement could put off the aforementioned bookmakers, who already have “reasonably stretched balance sheets”. Baltram has proposed that PartyGaming/Bwin may be interested in consolidating further and purchasing 888, although as the founders of the company, the Shaked family, have a controlling stake in the business, a takeover could prove “complicated”.
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