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A Matter of Perception

9 December 2008

By Lorien Pilling

At the recent Gaming Conference hosted by Collins Stewart in London, it seemed that several of the speakers were keen to classify their companies as anything other than "gambling businesses" -- perhaps reflecting the changing nature of the online gambling sector as it enters uncertain economic times.

Mark Davies, a director of Betfair, saw his betting exchange business as less of a betting company and more of a media company. With the growth of live, in-running betting and the broadcasting of sports events on the Web site, Betfair is seeking to use sports content to drive betting activity. The ultimate aim would be to have a United Kingdom broadcaster integrate Betfair into their existing product.

In the industry’s arguments with various European monopolies, Mr. Davies stressed the important role played by Charlie McCreevy, the European Commissioner for the internal market and services, over recent years. The industry will hope to be equally well served when the new commission team takes office in November 2009.

James A. Ryan, chief executive of PartyGaming, described his firm as an entertainment company rather than a gambling business. He spoke of a "challenging business environment," citing factors like currency fluctuations, a general consumer slowdown and an unlevel playing field in online poker because of those operators still active in the United States.

But he also listed some opportunities to exploit -- notably, the chance to leverage PartyGaming’s core assets through the licensing of its services: software, payments solutions, customer service and marketing expertise.

Regarding the ongoing situation with the United States Department of Justice, Mr. Ryan explained that “there is light at the end of the tunnel, and can see it’s not a freight train!”

William Scott of Gtech Corporation also highlighted the “ultra-competitive” nature of the sector at the moment, with pressure on revenues and prohibitive cost-per-acquisition levels.

Some good news for the poker sector was provided by Thomas A. Hall, chief executive of AsianLogic Ltd., who reported that interest in Texas Hold’em poker was picking up in Asia and had the benefit that it seems to be a less politically sensitive issue than other casino games. But he did acknowledge that the junket business model that is particular to Asian markets is having some difficulties in the current market conditions. Indeed, AsianLogic announced its own profit warning to the market a few days before the conference as its investment and operational activities were hit by the downturn in the second half of 2008.

Warwick Bartlett, the owner of Global Betting and Gaming Consultants, described the conference’s atmosphere as one of an industry preparing itself for the potential downturn but with a realization that the Internet market is still growing and that there remains pent-up demand to bet with legitimate operators.

The buzzword of recent weeks in the gambling sector has been “cyclicality” -- how resilient is our sector to wider economic difficulties? Online gambling has not really been through such an experience before, so the first real indications will come when companies start reporting fourth-quarter results early in the New Year.

A Matter of Perception is republished from

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