Predictions Accurate for Online Gambling Giant

Published Saturday, September 01, 2012 -

When it comes to the online gambling business most investors look around for innovation and potential that spells profits. Sometimes those companies that are successful as small entities and are swallowed up by larger firms with more capital and experience make great strides and show they can be great with the backing of giants. At other times bigger isn’t necessarily better as large firms can be slow to react to tougher times and can’t maneuver through the various rocks and shoals that present themselves in the sea of other offerings.

Such is the case of the Bwin, Party Gaming merger that everyone thought to be the best investment since sliced bread. The formation of Digital Entertainment in 2011 caused a stir in the online gambling world that many have taken a second look at with a note of scepticism. According to press releases at the time the company said the merger “created a clear market leader” and was “a defining moment, not just for but for the industry as a whole.” The reality has emerged as executives and the best of both firm’s most experienced people have found employment elsewhere leaving in disarray which of course opened the door for other more agile operators to fill the gap and take market share away from the distracted ventures.

The stock of the company began to slide soon after the merger as the market cap of about $1.27 billion went down to only one-third the combined value of bwin and PartyGaming less than seven months after the merger was announced. The taxes imposed in Germany on sports betting affected some of the bottom line results as did the PokerStars settlement in the USA which narrowed the margin for in the lucrative US facing poker market. Taxes, settlements and the changing regulatory environment for online gambling operators has made for a rough road for publicly traded

Investment analysts and predictors of business futures should have seen the writing on the wall for and been more realistic in the outlook provided. Time will tell though as continues to move slowly and somewhat cautiously through the uncertainty of today’s online gambling market.

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