The Split is (Not) Bananas

August 5, 2013
CLARK.LAW

One of my favorite sources for internet gambling news, iGaming Business, is reporting that shares in bwin party have jumped 24% recently following rumors the group was thinking about splitting up into regulated- and unregulated-focused operating entities.  I hope this is true and if it is I applaud whatever genius came up with this idea.  Why would I use a term like “genius” to describe this idea?  Because I thought of it first – that’s why.
Earlier this year I proposed to a major international gambling company, on behalf of a client, that it should undertake a new venture that leveraged its ability to operate in regulated markets, while partnering with my client to lead the efforts in unregulated markets.  The overall business of both entities would be essentially the same, but I reasoned that the approaches were different enough in regulated versus unregulated markets that it made sense to split the efforts between two distinct organizations.
The rumored move to a regulated markets unit would enable bwin party to attract a broader investor base and agree to further joint ventures with US casino operators (in addition to the ones they already have in place with MGM and Boyd Gaming). A division focused on unregulated markets would enable the group to generate revenues and returns to investors without the regulatory costs the company has to bear in countries like France, Spain or Italy.
Not to diminish the self-congratulatory nature of this post, I do believe that this will be a legal and operational approach that is pursued by more organizations in the future.  I often ask industry experts whether they believe that there is enough of a customer base in the non-regulated parts of the world to sustain an online gaming business, and I am almost always assured that there is.  (The individuals who don’t agree are typically working for a company that is heavily invested in regulated markets.)  All eyes should be on this split approach from bwin party, because if they are successful, more similar arrangements are sure to follow.

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