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888 Denies Amaya Purchase of Bwin.Party

888Poker  888 Holdings has swept in at the last second and completed a deal to acquire Bwin.Party, denying Amaya Group the ability to continue to grow their monopoly.  The new company formed by this merger will put it as the third largest gambling company in the world behind only Amaya and Bet365.

888 Holdings Acquires Bwin.Party for $1.4 Billion

At the end of the article looking at what PokerStars would gain from acquiring Bwin.Party we said that it was still possible a deal might not get done.  That possibility ended up being a reality as 888 Holdings swooped in at the end with a $1.4 billion offer that they could just not refuse.  The offer will see 888 and Bwin.Party combine services, but remain distinct brands, to create a company that will have just a hair less than Amaya in terms of revenue per year, this is before any growth that can be expected from having a larger and more well-known company emerge.

Deal about More than Poker

This deal is about much more than poker, and actually highlights how small poker is in comparison to almost every other part of online gambling entities.  As mentioned this Bwin.Party and 888 Holdings will become the 3rd largest online gambling network on the internet, but what might surprise many people is that Amaya is only 2nd, and it is unlikely to stay there is there is any growth from this new merger.  The largest company by revenues in internet gambling activities is actually Bet635 by a fairly significant margin.  Interestingly enough, none of these networks offer poker rakeback to their players.  Sports betting and casino are such a large portion of revenues that despite a small poker offering, companies can easily out earn Amaya by offering and specializing in other more popular areas.

That is why losing this bid is so disappointing for Amaya.  They have had some success with casino games in market such as Spain, but overall they have yet to really make a mark in the highly competitive and semi-mature market of internet gambling outside of poker.  Acquiring Bwin.Party would have given them a solid footing to expand from in this arena and now they will either have to go acquire a less experienced and proven company or continue to develop their own mechanisms and attach them to the PokerStars or Full Tilt brand, which could have fairly obvious downsides.

What this means for Poker Players

Even though this is an important move outside of poker, it doesn’t mean that poker still isn’t something that should be considered.  According to PokerScout.com 888Poker and PartyPoker are 2nd and 7th in the world right now in terms of 7 day rolling averages for traffic, and while combining them will give them just short of 3,500 players, that is a far cry from the 17,000 average that PokerStars enjoys right now.  What can’t be accounted for though, and what will be interesting, is to see how having a much larger network will change things.  It is possible it will have no effect, because they are different sites, but it is also possible that they could run some promotions drawing from each site to try to challenge the strangle hold that Amaya has on the market.  Time will only tell, and it will be a bit before that clock starts as the deal is not expected to be done until late 4th quater of 2015 or early 1st quater of 2016, as to allow time for regulatory bodies to approve the deal.

Summary

888 Holdings and Bwin.Party combining changes a lot of things in terms of balance of power.  While Amaya stays at number 2 in the world in terms of revenue, it might not stay that way for long if this merger creates any kind of forward momentum with the sites.  While the move will be an expensive one at $1.4 billion, it seems to strength the portfolio of each company significantly and helps make sure a major competitor doesn’t get a helpful asset.