Party profitable in France by end of 2011
PartyGaming will be profitable in France by the final quarter of this year, with CEO Jim Ryan arguing this proves the value of the network model in regulated markets.
PartyGaming will be profitable in France by the final quarter of this year and believes it has the model in place to achieve profitability in other regulated markets within 18 months of entry, two of its senior executives said earlier today.
Group finance director Martin Weigold confirmed to eGaming Review: “France will be profitable from the last quarter of this year, once we have deducted the costs of acquisition and retention, contracts, gaming fees.”
CEO Jim Ryan (pictured) said that by engaging regulators early, requisite investment in technical and compliance (2m in France) and engaging with “meaningful local partners” it felt confident it could reach 10-20% market share and be profitable within 12-18 months in each new market.
Ryan told investors: “We have applied this model in France. Looking at the PokerScout data, we have a 14% market share, but more importantly, looking at what happens when you merge Party and Bwin’s liquidity, we would be a clear number two [with+28%].”
Pointing to the fact that net poker revenues had reached 163% of pre-regulation levels by the end of January 2011, 100% after tax, Ryan said the company now had the model to apply to soon-to-be-regulated markets such as Denmark, Greece, Holland and Germany.
Ryan told eGaming Review that France proved the viability of the poker network model in regulated and ringfenced markets, despite the costs of establishing in these pointing towards there eventually being only “three to five meaningful players” in each.
“The viability of the network model not only exists, it’s more important in regulated markets. The Party brand was not too big in France, so we needed to leverage the assets of someone else [PMU, Aviation Club de France, AB Groupe]. We brought the poker experience, poker liquidity and poker platform, and they brought the customers. It was a natural partnership. The network model is still important in regulated markets.”
He also emphasised that no decision had yet been made about the future of the Ongame network, despite merger partner Bwin recently suggesting it could be sold following the merger. “We will look to maximise and get as much liquidity as possible in our combined network. As best to move forward, it will be a decision based on the poker platform and the French, Italian and dot.com position when we put the liquidity pools together.”
There was however “no news” over whether Party would be partnering with incumbent monopoly Danske Spil in Denmark, given an earlier agreement successfully challenged by Playtech, but Ryan said the tie had been a “welcome catalyst” to being ready to participate. “The technical work is done. It’s a small market, we have spent the time and investment to make this happen, which many of our competitors haven’t.”
Weigold added the company had projected for a 50% increase in revenues from the launch of cash poker in Italy over the next 12 months, which the company said it expected to launch from May.
“We expect some degree of cannibalisation of tournament poker by the move to cash games. The typical revenue split between tournament and ring games is 30/70, and there is a two-fold uplift when you shift, but the mix is currently distorted by the fact you can only play tournament poker in Italy. We expect a 50% increase in revenues coming from the addition of cash poker over next 12 months.”