Five consequences of a deal: PartyGaming's Danske Spil B2B tie

PARTYGAMING’S BUSINESS-to-business deal with Danske Spil this month to provide the Danish state lottery provider’s poker and casino platform will give Party a key strategic position in the market once it opens to private operators in early 2011. Danske Spil is Europe’s sixth-largest gaming operator by market value, reporting a turnover of nearly DK11bn (£1.3bn) in 2008.

1) Party beating off strong competition for the contract validates chief executive Jim Ryan’s strategy of winning B2B contracts to hedge against monopoly-led protectionism.

2) With annual licence costs rumoured to be high (up to DK4m/£455,000 a year), and it still unclear if private operators will be allowed to offer bingo, the deal gives Party positioning in Denmark without having to clear this hurdle.

3) Although likely to face competition from PokerStars, Ladbrokes, Unibet, Betsson, Nordic Bet and Bwin next year, Danske Spil will be leveraging off 500,000 existing customers. As Svenska Spel proved from 2006, a strong poker platform can be built on leisure-oriented players comfortable only on state-licensed sites.

4) A state monopoly entering the poker and casino space by partnering with a private operator like PartyGaming represents a coup for the industry. Party will seek similar contracts elsewhere.

5) As more countries regulate egaming, the competition for contract wins will intensify. This is bound to lead to more consolidation activity: operators merging with complementary products, or operators and ‘tech’ companies uniting.