Both Empire Online and Party Gaming spokesmen today (Thursday) confirmed
yesterday's media reports that a sale of the former was being discussed.
Discussions on a sale of Empire's gaming business and assets are at
an "advanced'' stage, Empire said today in a statement reported
by both Reuters and Bloombergs news services.
PartyGaming, which disclosed its involvement in a separate statement,
was Tortola, British Virgin Islands-based Empire's main customer before
the companies became legal adversaries in a case that was later settled.
Empire was one of four "skins,'' or marketing partners, that
fed players to poker tables at the PartyPoker.com Web site. PartyGaming
agreed in February this year to pay $250 million to settle a lawsuit
that Empire filed after its players were barred from sharing tables
on an improved poker platform at Party Poker. Party bought two of
the other skins, and the third left its (old) platform.
Internet gambling operators are scrambling to replace lost sales following
the October enactment of the U.S. Unlawful Internet Gambling Enforcement
Act, which has separated companies including PartyGaming and Empire
from their main revenue sources. Consolidation in the industry is
inevitable, say analysts.
"This is the aftermath of what happened in the U.S.,''
Alex Kyriakidis, a managing partner at Deloitte & Touche in London,
said of today's announcement.
Empire, the owner of Web gaming brands including Noble and Titan Poker
and Club Dice, plans to use its substantial cash reserves to become
an investment company if it sells its gambling business, company spokesmen
confirmed. Empire's Internet casino generated revenues of $30.2 million
in the first half of 2006, while its Internet poker site generated
$8 million.
U.S. gamblers accounted for about 85 percent of sales in 2005 at PartyGaming
and around 65 percent of Empire's revenue when the company said it
would no longer accept wagers from Americans.
Earlier this year - three weeks before the United States banned Internet
gambling financial transactions - a source close to Empire told Reuters
the group was planning to invest its $250 million cash pile outside
the online gambling industry, and it has been suggested that property
development may be one new direction for the group.
"Shareholder approval would be required for a disposal
of the company's trade and gaming related assets and in order to approve
the company's investing strategy," an Empire Online spokesperson
emphasized."The proceeds of any disposal would be used
together with the company's existing cash of approximately $250 million
to invest opportunistically in both private and public businesses
and across the small, mid and large-cap range of companies,"
he added.
Noam Lanir, Empire's founder and chief executive officer, owns a stake
in the company of almost 33 percent, according to data compiled by
Bloomberg. The holding is worth some GBP 41.7 million ($82 million)
at the stock's current price, based on a percentage of the entire
company's market value. Lanir bought 30 million shares on November
7.
The U.S. measures have spurred at least one other Internet gambling
company to quite the industry. Shares in Australia-based Betcorp Ltd.,
which also generated most of its revenues from American gamblers,
are no longer traded in London after the company sold its entire wagering
business last month to the Bodog group, which operates from Costa
Rica.
A PartyGaming spokesman vehemently denied Internet rumors circulating
yesterday that the group was planning to re-enter the U.S. Internet
gambling market.