[the guardian] Shares in UK online gaming companies have soared after the websites of some US rivals were shut following a government crackdown on illegal gambling.
Bwin.party shares shot up 30%, with Playtech and 888 Holdings up 8% and 19% respectively, as investors bet on high-value players, affiliates and processors switching to safer sites.
The big wins for the European companies, which do not operate in the US, followed moves by the US government on Friday to charge the founders of three of the world's largest online poker companies. In what amounted to the most drastic crackdown on electronic gambling since Congress banned the industry in America in 2006, the government accused the creators of Full Tilt Poker, PokerStars and Absolute Poker of illegal gambling, money laundering and bank fraud.
Execution Noble analyst Geetanjali Sharma said: "The US-facing operators have been a drain on the profitability of the European operators as their US liquidity drew the non-US poker players. At the same time these operators diverted cash gained from the US operations to gain market share in the regulating territories in Europe. The closure of the main competitors' operations and the US legal proceedings initiated against them should benefit European listed operators."
While non-US players can still play poker on the banned sites, the disruption and seizure of funds could make it difficult for the operators to continue and may drive some punters to rival operators. In the world of online poker, the more players a site has, the more attractive it becomes to new players, as it is easier for them to find games with the appropriate level of stakes and payouts.
The liquidity argument has worked in favour of the sites that have operated illegally in the US since 2006. In January 2007, PokerStars and Full Tilt together accounted for about 30% of the market, but that had doubled before last week's crackdown, according to gambling data provider H2 Gambling Capital.
However, Simon Holliday, a director at H2, advised caution, saying: "The market always overshoots. There may be a transfer of accounts to the likes of [Bwin.party's] PartyPoker, but this will occur over time."
Analysis by poker monitoring website PokerScout.com suggested that traffic to PokerStars has dropped by 25% over the past week, while Full Tilt slumped 48%. Conversely, the number of visitors to PartyPoker and 888 increased by 8% and 5% respectively.
Meanwhile on Saturday, Las Vegas casino group Wynn Resorts cancelled the deal it had struck with PokerStars just three weeks ago, while Fertitta Interactive, the owner of Station Casinos, also pulled out of its recently announced deal with Full Tilt.
Analysts now expect European operators to aggressively pursue similar deals with the major casino operators in preparation for the long-awaited regulation of the US gambling industry.
Michael Caselli, editor of trade magazine iGaming Business, said: "I think for [Wynn and Fertitta] it's a case of once bitten, twice shy. I think they will do these deals, but there won't be anything until we see some serious regulation."
The US move represents a stark change of fortune for UK-listed poker operators. Bwin.party, which was created from the merger of Bwin and Party Gaming, and whose shares began trading on the London Stock Exchange at the end of March, saw its stock slump in its first week as a combined group, on news of a proposed new betting tax regime in Germany.
Meanwhile, 888 was hit last week by the withdrawal of bookmaking group Ladbrokes from protracted takeover talks.
Bwin.party and 888 see shares soar after crackdown on US poker sites