19 Oct 11

Bwin.Party Eyeing Up Return to US Market

Bwin.Party is moving one step closer to returning to the US market, according to an article on Forbes yesterday.

Jim Ryan

Bwin.Party Co-Chief Executive Jim Ryan has spent most of the last month in America giving presentations to potential investors, and emphasising the strengths of Bwin.Party, who are the largest publicly traded online gambling company in the world. 

This presentation includes a provocative one page chart that lists the three largest online poker brands; PokerStars, Full Tilt, and Party Poker, with the first of those two names crossed out in red marker:

“Where you see the red lines, those organizations have been indicted, so although one can’t predict the future, it’s unlikely you will see those brands back in the US,” Ryan said in an interview with Forbes “The brand that has the most consumer awareness is in fact the PartyPoker brand.”

US Partnerships

Ryan is currently said to be in the final stages of negotiating partnerships with two US companies. He commented that such a partnership was the most likely route back into the US, rather than attempting to enter it once again on their own:

“We had to be realistic about where we sat in the food chain. We figured if the US regulated it would be unlikely that we would secure a license directly, that the laws of the land would be written to allow existing land operators and equipment manufacturers in the US to secure the licenses.”

PartyPoker were the biggest online poker site in the world until 2006, when US Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA). This prompted PartyGaming to pull out of the US market and watch while PokerStars and Full Tilt Poker captured the majority of the market share.

The move at the time was heavily critcised, as was the non-prosecution agreement they signed in 2009. This cost them $105 million and forced them to admit they had violated US law. Their share price continued to plummet, while PokerStars and Full Tilt went from strength to strength.

That was until April this year, when federal prosecutors shut down PokerStars and Full Tilt, in what has become known around the poker world as Black Friday.

Vindicated By Non-Prosecution Agreement

“I think Party has been vindicated now in getting out when they did and in dealing with the Department of Justice,” says Behnam Dayanim, of Axinn Veltrop & Harkrider, who negotiated PartyGaming’s non- prosecution agreement.

It has not been plain sailing for PartyPoker since then, despite acquiring the World Poker Tour in 2009, and merging with Bwin in 2010, their stock plummeted by 50% earlier this year. However the suspension of Full Tilt Poker's license in June this year appears to have been the catalyst for change, and now PartyPoker is the second biggest online poker room, behind PokerStars.

Now Ryan says the time is right to concentrate on re-entering the US market: “My focus is on the U.S. Even though there is no guarantee that online gaming will ever regulate in the U.S.”

He also confirmed he is preparing for the possibility of a US market that regulates state-by-state: “We have to be ready for both federal or state, It feels good to have American taxpaying companies finally driving this.”