Gambling News by Gambling Headquarters

PartyGaming today snapped up the gambling assets of its smaller rivals Empire Online and Intercontinental Online Gaming for $66.3m (£33.7m) in shares. The acquisitions will add Empire's Noble Poker and Club Dice casino websites to PartyGaming's stable, as well as Intercontinental's Fair Poker, Magic Box Casino and Miss Bingo sites. The two deals are expected to be the first in a wave of consolidation in the wake of US anti-gambling legislation passed in October. The crackdown has forced PartyGaming and all other London-listed online gaming operators to pull out of the world's most lucrative gaming market. Aim-listed Empire said it will become an investment company after shedding its gambling assets. The deal provides the exit that the group's founder and chief executive, Noam Lanir, has been seeking for months. He has a 32.6% stake in the firm. PartyGaming will issue 115.19m new shares to fund the deals. The group previously made three-quarters of its profits in the US and the acquisitions form part of its efforts to refocus its business on Europe and the Middle East. Mitch Garber, PartyGaming's chief executive, had previously made it clear that the company was on the prowl for smaller targets following the US crackdown. He said today the deals will add earnings before interest, tax, depreciation and amortisation of at least $8.5m next year. They will also bring "strong management with excellent marketing skills that will help us to accelerate our promotional plans for each of our individual products, particularly in casino which will continue to be spearheaded by PartyCasino," he said. PartyGaming is very keen to tap into Empire's marketing expertise. Empire specialises in recruiting punters through its "skin" websites and receives a cut of revenues from its various gaming service partners. Empire said it will use the net proceeds of $37.96m from the sale of its gaming websites, along with is cash reserves of $250m, to invest in both private and public businesses and across the small, mid and large-cap range of companies. It said its remaining Internet gaming business was too small to thrive on its own following the US clampdown which wiped out 65% of revenues.

Following completion of the deals, PartyGaming will enter into a software licensing agreement with Playtech, it said.

PartyGaming's poker revenues plunged in the aftermath of the US clampdown but have since recovered. The company also crashed out of the FTSE 100 index.