The recent partnership agreement between Bwin.Party and US casino companies MGM Resorts International and Boyd Gaming has resulted in a substantial increase in share prices of the European-based gaming company.
Shares of Bwin.Party are up 11 points, currently trading at 120.7, on the heels of the announcement of the merger which is aimed at providing internet poker to US players if gaming legislation is enacted in the United States.
“This is a potentially huge long-term deal that, along with Bwin.Party’s excellent European assets and brands, supports our bull stance,” said James Hollins of Evolution Securities, an investment banking company based in London. “Short-term risk remains over changes to German legislation, but we think this is priced in and the shares are good value on current estimates.”
Bwin.Party will retain 65 percent of the newly formed entity, while MGM Resorts International receives 25 percent and Boyd Gaming will hold a ten percent stake in the agreement. The deal is believed to be for 15 years, but is contingent upon U.S. lawmakers structuring legislation that allows and regulates online poker in the U.S. market.
“There will be one poker network, with MGM, Boyd, Party Poker, and the WPT [World Poker Tour], four brands on one network.” Bwin.Party co-CEO Jim Ryan said.
Bwin.Party is the parent company of Party Poker. The two are currently separate entities, but integration processes are now in the works. Also in the works of the new merger are attempts to secure licensing in Nevada.
Paul Leyland, a representative of Investec Bank, an international investment group in London that focuses on asset management and specialist banking, also felt that the deal between the trio of companies was quite attractive, but he did have some reservations.
“We would not get carried away for three reasons. One, legalization of poker is still likely to take some time and Bwin.Party’s ‘suitability’ is not guaranteed. Two, a U.S. regulated poker market is likely to be far less lucrative than historical ‘.com’. Three, medium-term performance should still focus on Europe,” Leyland said.
Leyland’s belief that online poker regulation in the US would not advance quickly was echoed by California Rep. Mary Bono Mack (R-CA), chairwoman of the House Subcommittee for Commerce, Manufacturing and Trade, following a hearing last week that debated consumer safety in the proposed online poker legislation. Mack urged her Congressional colleagues to move slowly in their considerations of internet poker regulations.
“I think to rush it [online poker legislation] would be a mistake,” Bono Mack said. “We have to find a balance of moving it and balancing the technological problems with the policy problems. There’s just way too much here that has to be fleshed out.“
Bwin.Party is listed on the London Stock Exchange and is traded as “BPTY.” The company could trade on the American market following the legalization of online poker at either the state or the Federal level.