Has Cryptologic Lost Betfair Poker?
Published: Friday, August 12, 2005 Online-Casinos.com
HAS CRYPTOLOGIC LOST BETFAIR POKER?
Speculation that Betfair may be doing its own thing
The Cryptologic share price took a 25 percent turn southwards early this week on news that its profits may be affected by the news that it could lost Betfair as an important poker customer.
Late the same day, the shares staged something of a recovery, prompting some analysts to opine that the investor reaction had been somewhat over the top.
Just before stock markets opened Tuesday, the Toronto turnkey provider company announced that Betfair, a British gambling group that uses CryptoLogic's poker product, is considering developing its own software.
Poker software has been a major revenue driver for CryptoLogic as the popularity of online poker has boomed. The industry has grown from about $100 million three years ago to $3 billion today, chief executive Lewis Rose said.
"It has to be the fastest growth business in the history of the Internet."
Rose said discussions with Betfair are continuing and no decision has been made on that company's Internet poker site.
CryptoLogic has nine licensees that connect online poker players around the world to its central online poker room.
"While Betfair has launched a successful, profitable site using CryptoLogic-developed software, Betfair's long-term strategy and practices in its core business has been built on technology solutions designed and developed internally," CryptoLogic said. "Decisions consistent with this strategy could result in Betfair establishing its own poker room and the termination of its contract with WagerLogic Ltd., the licensing subsidiary of CryptoLogic, in early 2006."
WagerLogic, established in 1996, is a wholly-owned subsidiary of CryptoLogic that has sold gaming software -- including casino, bingo and poker games -- to blue chip customers including William Hill, the Ritz Club London, Littlewoods Gaming, Ukbetting plc and Betfair.
Online poker accounted for 30 per cent of CryptoLogic's second-quarter revenue.
