iGaming: More Joint Ventures, Strategic Alliances, and Mergers & Acquisitions Than You Can Shake a Stick At

We last blogged about the explosive developments that have followed the DOJ’s Wire Act Opinion.  States throughout the U.S. have been scrambling to install iGaming legislation and programs.  Just as the states have been doing, but far in advance to the DOJ’s Opinion, a broad range of companies in the gaming industry have been scrambling to be in the best possible shape for the hopeful explosion of iGaming opportunities in the near future.

It’s not just companies involved with existing iGaming markets in other parts of the world, but also major brick-and-mortar suppliers such as IGT and even brick-and-mortar operators such as Caesars Entertainment, preparing for iGaming in the United States.  iGaming is new and exciting here, and even companies rooted in the social media industry, such as Zynga, have taken steps to take full advantage of legal online poker in the U.S.  Briefly we’ll review some of the recent and notable corporate alliances, mergers & acquisitions, and joint ventures in the iGaming industry.

Brick-and-Mortars

  • Caesars Entertainment:  Has been very active in acquiring and partnering with social and online gaming-related companies.
    • Acquired 51% of social media slots developer Playtika in May 2011. Completed acquisition of Playtika before end of 2011
    • Partnered with the French hotel and casino operator Groupe Lucien Barriere to promote the World Series of Poker brand throughout Europe and to co-develop an online poker platform
    • Renewed its licensing agreement with 888 Holdings for the right to deploy their proprietary online poker platform in US markets where they procure an online gaming license

    Churchill Downs: In February 2012 purchased Bluff Media(a poker publishing firm) to compliment its online betting site- Twinspires.com.
    MGM Resorts International and Boyd Gaming: Both made partnerships with online poker operator bwin.party in October 2011.  The two brick-and-mortar operators have the right to use Bwin’s software in the US.

Slot and Electronic Gaming Machine Manufacturers

  • IGT:  Has made several social media and online poker-related acquisitions.
    • Acquired Double Down Interactive (a social media poker developer) for $500 million in February; allegedly to the ire of some of its brick-and-mortar clients
    • Partnered with Joingo to release a mobile phone app that creates a social media experience for fans of IGT gaming machines
    • Purchased Entraction Holding AB (an iGaming software developer) in June 2011 and is rebranding their online poker network as the IGT Poker Network

    Bally Technology and Aristocrat Technologies: Announced (in March 2012) a strategic partnership to provide Internet gaming product in the US.  Bally also acquired Chiligaming’s iGaming platform.
    Shuffle Master Inc:  Announced in early March 2012 that it would acquire bwin.party’s Ongame Network for $28.5 million to expand its online gaming offerings.

Traditional iGaming Vendors/Operators

  • Chiligaming:  As previously mentioned Chiligaming sold off the business-to-business portion of its business to Bally Technology.  The online gaming developer/operator also stuck a partnership with U.S. brick-and-mortar operator Golden Nugget in February 2012.  The terms of the partnership involve Chiligaming launching a free-to-play online poker site under the Golden Nugget banner in preparation for becoming a player in future US markets.

Social Media Game Developers

  • Zynga Inc: While nothing official at the time of writing, social media game developer giant, Zynga Inc. has suggested to the press that it is considering entering the iGaming market via a partnership with a brick-and-mortar firm.

Key Takeaways

Though the legal iGaming industry in the US is in its infancy (maybe even in the prenatal stage), those looking to get involved have taken an aggressive approach.  The sit-and-wait approach would forfeit a first mover’s advantage in this market, which operators such as Caesars and suppliers such as IGT value at a premium.  Will all of these acquisitions and joint ventures payoff?  That remains to be seen, but the keenly interested are willing to burden the risk for a crack at this emerging industry.

Contributed by:

Nicholas Farrae

Analyst, Economics & Gaming

nicholasfarrae@tmg-consulting.net  or  (504) 569-9239 x 31

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Disclaimer
The views, interpretations, or strategies expressed are those of the authors, and do not necessarily reflect the position of TMG Consulting. This site is meant for educational purposes only and does not constitute professional advice. TMG Consulting makes no representation as to accuracy, completeness, or suitability of any information on this site and will not be liable for damages arising from its display or use.
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2 Comments

  1. Great info! I wonder if you are planning to do some research of IB market.Would be interesting to read.Thanks for the sharing!!

    Reply
  1. Status of Internet Gaming in the United States | TMG Insights - The TMG Consulting Blog

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