U.S. Could Be Key Catalyst for Bwin, Party, Analyst Says

After this article was published, details regarding Bwin and the United States Justice Department were added in the last graph.

Vaughan Lewis, an analyst with Morgan Stanley, said a regulated United States market could add as much as £13 to PartyGaming's current share price and 100 euros to Bwin's.

Mr. Lewis's estimates were based on a "blue-sky scenario," which assumes the United States gambling market is worth approximately $16 billion five years after an effective regulatory regime is installed there.

The $16 billion figure Mr. Lewis quoted was put forward by H2 Gambling Capital, a multinational data consultancy.

Under the blue-sky scenario, PartyGaming could control 10 percent of the country's business-to-consumer market share and 15 percent of the business-to-business market share. And for its part, Bwin could control 5 percent of the b-to-c market and 15 percent of the b-to-b market.

Mr. Lewis suggested both companies are well-suited for market entry of any kind in the United States given their ability to offer a range of services.

"Both could enter the market as fully-regulated operators through their operating brands partypoker.com and bwinpoker.com," he said. "Both operators could also enter through B2B deals, sharing liquidity, and using their technology to provide instant access to the market for any gaming or media site owner."

By America-facing operating brand -- PartyPoker.com versus the defunct PokerRoom.com -- Mr. Lewis gave the advantage to PartyGaming.

Before both companies discontinued operations in the United States nearly three years ago, Party controlled around 18 percent of the market there, and Bwin, 2.5 percent.

Moreover, in the absence of any marketing, Party continues to sign up around 4,000 new American customers to its dot-net site daily.

"We expect significant structural change in the industry over the next two to three years, with both Bwin and PartyGaming, as the leading non-US operators, at the forefront of industry development and consolidation," said Mr. Lewis, who initiated coverage on both stocks Tuesday.

Recently PartyGaming reached a $105 million settlement agreement with the United States Justice Department, but some analysts -- including Mr. Lewis -- remain uncertain about how that agreement will affect the company's American future.

A spokesman for Bwin told IGamingNews Wednesday the company has not received any communication from the Justice Department.