PartyGaming signs five-year B2B tie with Danske Spil

PARTYGAMING HAS signed an exclusive five-year business-to-business (B2B) deal with Danish state lottery Danske Spil.

The Danske Spil Group is one of the largest betting and gaming organisations in Europe with DKK 10,955m (£1.32bn) of turnover in 2008 and a customer base of more than 500,000 registered online customers. Its product offering comprises the national lottery, egaming, gaming machines, scratchcards and instant games.

The deal will see PartyGaming’s B2B arm provide Danske Spil with online poker and casino games in Denmark. The commercial terms between both companies are expected to be finalised within the next few weeks.

In 2009 the Danish Government published draft legislation for a partially liberalised gaming market in that is expected to become law next year. If adopted, poker and casino will be among the games subjected to open competition in the Danish market.

PartyGaming chief executive Jim Ryan said: “This is a landmark B2B deal for PartyGaming and validates our strategy to become a leading provider of B2B services to both corporates and governments around the world.”

Danske Spil chief executive HC Madsen said: “PartyGaming is definitely a strong business partner for Danske Spil. Combining [it] with Danske Spil’s unique and strong position in the Danish market with more than 500,000 Danish online customers will guarantee that together we will deliver a highly attractive customer experience.”

The deal, which reflects Jim Ryan’s view that a strong B2B offering is a vital hedge against protectionist regulation in newly regulated markets, has won PartyGaming plaudits from analysts. Paul Leyland at brokerage Collins Stewart said: “We suspect Party won this mandate against stiff competition and, with Danske Spil likely to play an important role in the shaping and eventual opening up of the Danish regulated market, Party should reap significant financial benefits.

“The targeting of State-owned operator B2B contracts has been high on the agenda of most entities ahead of the expected de-monopolisation of State markets such as Denmark, and Party has partially validated the investment in its own B2B operations in the past few years.”

James Hollins at Daniel Stewart said: “Denmark is likely to announce online regulations in months, to go live 2011; the national lottery will undoubtedly play a key part. On a standalone basis, therefore, the deal is highly attractive not only in terms of regulated exposure but also of quality of partner.”

For more on this topic, see our Five consequences of a deal: PartyGaming’s Danske Spil B2B tie feature.