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its support of Betinternet. In particular, the board believes that further growth in the fixed odds business is achievable, especially from ‘In-Running’ betting, where additional website enhance- ments to improve the user experience are expected to be delivered prior to the start of the forth- coming European football season.”


Industry consolidation set to continue


M&A F


urther consolidation in the European gaming sector is ‘inevitable’ over the next 12 to 24 months, according to Richard Carter, gaming equity research analyst for Deutsche Bank. Speaking at the World Gaming Execu- tive Summit 2011, Carter provided a concise overview of the changes that have occurred through- out the industry over the last 12 months and offered his predictions as to the future shape of the European gaming landscape. “Firstly, when looking at the number of European- focused gaming transac- tions since 2009, it is clear that we have started to get a big increase in the number of acquisitions,” he said. “In 2010 there was a 20 per cent increase in M&A activity, and in 2011 the momentum is equally strong.


“Looking at some of the individual M&A transac- tions, deals of many differ- ent shapes and sizes are taking place. In the online sector we have the trans- formation of Bwin and Par- tyGaming through a huge cross-sector merger. Private equity interest in gaming companies is also on the up, with investments


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RICHARD CARTER: ‘COMPANY VALUATIONS ARE ALMOST AT AN ALL-TIME LOW’


in companies such as Inspired Gaming Group and OpenBet.”


He added that it was a global trend: “In addition, we are beginning to get a lot more cross-border M&A activity, with Paddy Power and Sportingbet acquiring online sportsbook opera- tors in Australia, along with William Hill purchasing a small sports betting company in Nevada, US. Moreover, one of the most interesting acquisitions to date is that of online gaming group Entraction by IGT, the US-based gaming machine manufacturer. This may be a sign of future things to come.”


Carter noted that cross- selling through different channels is becoming increasingly important, as


larger gaming companies look to encourage loyalty and add incremental rev- enues by establishing a unified presence in the land-based, online and mobile sectors. “Looking forward, our top-down view is that further consolidation in the gaming sector is inevitable, and we think it is going to increase significantly over the next 12 to 24 months,” he stated. “The key drivers, in our view, are sector con- vergence and companies’ continued expansion into new geographies. In addi- tion, company valuations are almost at an all-time low. I think this will also stimulate and encourage consolidation, and - poten- tially - further private equity interest.”


things for 2012 ams of the Betfair shareholders next year.


dropped 14 per cent com- pared to the previous year and now represents 7 per cent of Core Betfair - this occurred after Betfair joined a poker network and lost some high rolling poker players who had previously been picking off the players in what had been a Betfair


ANALYSIS


Betfair has found itself in the unusual position of having to win over its investors so soon after its IPO and has laid out a strategy to accelerate revenue growth through a new integrated exchange and sportsbook, mobile channel development, and unspecified geographic expansion. It also wants to drive up its margins by concentrating on high rollers, increasing its controversial Premium Charge, and making cuts in marketing, operations and technological investment. Sensibly, it has also promised to return excess cash to shareholders ‘from time to time unless there is a clear alternative strategic use for the money’. Betfair’s £150m+ in the bank could prove to be the perfect sweetener for disenchanted shareholders.


only player pool.


In the meantime, Betfair has appointed Matt Robin- son from Bwin.party to the new role of emerging markets director. He will focus on the management and growth of the company’s commercial emerging markets strategy,


which will require provid- ing direction across product management, marketing, brand management, sales and distribution in new ter- ritories.


Robinson said he was delighted to be joining Betfair in such an exciting role: “Betfair has done a huge amount to revolu- tionise the industry in the UK and consumers around the world also deserve to benefit from its unique offering.”


Chief commercial officer


Niall Wass added: “The cre- ation of this role is further testimony to Betfair’s inter- national aspirations and I am delighted to have Matt on board. Matt will play a vital role within the com- mercial function as we aim to position Betfair for entry into new countries and ter- ritories around the world.”


BettingBusinessInteractive • AUGUST 2011 29


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Photographs courtesy of Coral Racing & Chisholm Bookmakers


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