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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Gibraltar firm rocks online gambling

7 October 2013

Gibraltar-based 888 Holdings Plc has quietly carved out an extra-large share of the neophyte U.S. online gaming market.

The company, one of the largest operators in legal European Internet gaming jurisdictions, has deals to operate interactive gaming platforms — the technology to house the online gambling websites — in all three states where the activity is legal: Nevada, New Jersey and Delaware.

As other states move to adopt Internet wagering regulations, 888 Holdings will buy into the game.

“We’re building a U.S.-based poker network,” 888 Chief Operating Officer Itai Frieberger said in an interview during last month’s Global Gaming Expo in Las Vegas. “The U.S. could become a very lucrative market.”

New York City-based Avenue Capital Group shares that view.

In March, the hedge fund, which manages more than $12 billion in assets, struck a deal with 888 Holdings to create the All American Poker Network. The joint venture plans to launch 888’s brands into the U.S.

“The agreement sees a leading U.S. financial institution backing one of the largest gaming platform operators in the world, joining forces to tackle a potentially huge market,” 888 Holdings CEO Brian Mattingley said when the deal was announced.

Through the joint venture, Avenue Capital and 888 are in position when individual states approve online gaming. If a federal bill to legalize and regulate Internet poker comes to fruition, the All American Poker Network has the resources to pounce on that opportunity.

Frieberger, who oversaw product and technology developments for 888 before becoming COO, said the company is creating an infrastructure for U.S.-based Internet gaming, similar to what the company accomplished in Spain and Italy.

“We see this as a business opportunity that we can take to any state,” Frieberger said.

The All American Poker Network provides 888 with a way to build a business-to-consumer model through its technology platforms. In Nevada, for example, 888 can launch its own real money poker website through a platform it is creating to manage a pay-to-play poker website for Treasure Island.

Last month, Nevada gaming regulators approved a marketing agreement between 888 and Golden Gaming. The statewide slot machine route operator will send customers from its 40 wholly-owned statewide taverns and the company’s three Pahrump casinos to the 888-branded online poker website. Golden Gaming would share in a percentage of the gaming revenues.

The company is still bringing its business-to-business model to the U.S. by offering its proven Internet gaming technology to casino operators. The company provided Caesars Entertainment Corp. the platform to launch WSOP.com last month in Nevada, a real money online poker site based on the Caesars-owned World Series of Poker.

In New Jersey, 888 has a similar arrangement to launch online casinos (poker, tables games and slots) for Caesars’s four Atlantic City resorts, possibly as soon as the end of November. In Delaware, the state’s three racetrack casinos could be offering players online slots, poker, blackjack and roulette by the end of the month on a platform managed by 888 and lottery systems provider Scientific Games Corp.

Frieberger was a popular guest in the G2E media center for the gaming press. The day before the casino industry’s largest trade show and conference kicked off, the All American Poker Network announced an agreement with Wynn Resorts Ltd. to provide the company a space on the 888 platform.

Under this agreement, Wynn’s online brands will be paired alongside 888.com brands. The idea is to increase the number of players — expanding liquidity — which is key to any successful Internet poker operation. State gaming regulators will have to approve the concept in Nevada and New Jersey.

“This is exactly the type of partnership we’ve envisioned when we formed (the network),” Mattingley said in a statement announcing the Wynn deal. “The challenge of establishing a robust, entertaining offering with ample player liquidity is one of our prime goals.”

Frieberger described 888’s business activities in the U.S. as “three states with 10 brands.” The company is eyeing other markets, including California.

During the company’s Nevada licensing hearings in March, Mattingley told the Nevada Gaming Commission that 888 collected $376 million in gaming revenue in 2012, a 13 percent increase over 2011 and the largest single-year total in the company’s history. Revenue from online poker alone increased 31 percent.

Online gaming in the United Kingdom accounted for 43 percent of 888’s revenues.

In addition to the Nevada WSOP.com site, 888 Holdings and Caesars operate pay-to-play World Series of Poker websites in several European markets.

The company views the U.S. as uncharted territory, and 888 is well ahead of its European competition.

PokerStars, which has an agreement with Resorts Atlantic City to operate online gaming in New Jersey, is precluded for five years from entering Nevada through the state’s “bad actor” regulation. PokerStars accepted wagers from Americans after 2006, following the passage of the Unlawful Internet Gambling Enforcement Act.

Bwin.party hasn’t been licensed in Nevada despite agreements with MGM Resorts International and Boyd Gaming Corp.

PaddyPower is also on the sidelines. The company, more closely associated with sports wagering, was found suitable by Nevada gaming regulators but has yet to strike a deal with an American casino company.

Meanwhile, as legal Internet poker expands across the U.S., 888 Holdings will grow its chip stack.
Gibraltar firm rocks online gambling is republished from Online.CasinoCity.com.