Gambling News - November 2006 Edition

Talk of Merger Between Two Major Online Casinos

The latest U.S. online gambling legislation is sending shock waves throughout the online gambling world and producing outcomes no one would have imagined prior to the Bill’s passing.  Thus, the Unlawful Internet Gambling Enforcement Act, recently passed by the U.S. Congress when it was attached to a Homeland Security Bill for the enhancement of port security, has caused two of the largest online casino companies to begin discussing possible merger opportunities.

The two online casinos, PartyGaming and 888.com, discussed a share merger that would amount to a combined market capitalization of around $3 billion dollars.  The possible merger serves to illustrate how the new Bill is affecting online casinos, which are being forced to reexamine their approach to the U.S. online gambling market.  Since the law has gone into effect, many online casinos have stopped doing business in the U.S. or have sold off their U.S. online gambling interests.  Critics are comparing the Unlawful Internet Gambling Enforcement Act to the 1920s-era prohibition on alcohol in the United States and warn that it will make online gamblers vulnerable to online casino sites that are unregulated and, perhaps, unscrupulous.

Of the two online casinos, PartyGaming has been hit harder than 888.com, because PartyGaming, known for its dominant position in the U.S. online poker industry, receives most of its profits from the U.S. market.  888.com, on the other hand, is a more diversified online casino and is less dependent on U.S. gamblers for its revenue.  So far, the talk of the merger remains just that – talk.  At this point, neither company is commenting on the discussions.

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