Bwin.party bullish on Schleswig-Holstein

Bwin.party expects to receive a Schleswig-Holstein sports betting licence “shortly”, the operator revealed in its interim management statement for the three months ended 31 March.

Only three operators have been licensed in the German Land to date – Betfair, myBet and Die NordwestLotto – and last week’s elections saw the Christian Democratic Unionists (CDU) cede power and leave the existing legislation open to challenge.

However in a poll of eGaming Review readers last week the majority believed the political change in the jurisdiction would only delay the implementation of legislation, rather than scuppering it completely.

The operator’s first-quarter results, still based on pro-forma numbers following the completion of the merger between bwin and PartyGaming last March, were generally flat with casino performing best and both poker and bingo declining.

Sports betting amounts wagered rose 11% year-on-year to €1.08bn, although net gaming revenue for the vertical fell 1% to €70.6m with bwin.party citing “[E]xceptionally high margin in prior year and higher bonus costs.” The slight decline in revenue was attributed in part to the failure to ensure the bwin sports platform was compliant with Danish regulatory standards, meaning that it was unable to launch when the market opened, cutting off sportsbook revenues from the market.

Bingo experienced the greatest decline with a 15% year-on-year revenue decline, due in part to the cannibalisation which occurred after the operator’s casino launch in Italy, and the closure of bingo operations in Denmark following the regulation of the market. In an analyst call this morning group CFO Martin Weigold claimed that the launch of a Spanish-facing bingo brand once the market regulates will help boost the vertical, where Italian decline overshadowed strength in the UK.

The first quarter saw group director of bingo Noel Rowse leave the company, while Cashcade founder Simon Collins moved away from day-to-day operations to launch bwin.party-backed egaming venture capital fund NewGame Capital, which has invested in social gaming start-up Avatingo.

Meanwhile poker experienced a year-on-year revenue decline of 3% despite the exit of competitors Full Tilt Poker and the Cereus network from the market, coming in at €52.2m for the quarter.

However bwin.party is preparing itself for a strong poker presence in an eventual regulated US market, having followed last year’s deals with MGM and Boyd Gaming with the announcement earlier this month of an agreement to launch a poker service with the Auburn Indian Community once California regulates egaming.

Co-CEOs Jim Ryan and Norbert Teufelberger (pictured) said in a statement this morning: “With the imminent launch of our download casino product on the bwin platform, the Euro 2012 football tournament starting next month and the integration of our poker liquidity in the second half, we remain confident about the Group’s full year prospects.”

After last week’s announcement that the Spanish tax fraud office was pursuing claims against a number of European operators over back-tax, with bwin.party rumoured to have been hit with a €60m tax bill, Teufelberger stressed that as the case was totally unconnected to the country’s egaming regulator the General Directorate for the Regulation of Gambling (DGOJ) it will have no bearing on whether or not the operator is awarded a licence in the market. Teufelberger went on to admit that it was “very hard to perceive what the outcome will be” but stressed that he felt the claims were unfounded.

Analyst Nick Batram of Peel Hunt retained his firm’s ‘Hold’ recommendation, explaining that “Uncertainty over Germany continues to hang heavy on the shares.

“Longer-term we believe the group is well placed but don’t see the need to rush to buy at the current point in time,” he added.