The preliminary results don’t provide any detailed figures explaining how, or by how much, online poker revenues have grown.
The specifics will have to wait for the full Q1 2016 report, but the news is extremely positive.
“Partypoker, which has been well publicised as having fallen off a cliff over the last four or five years and has been the Achilles’ heel for the previous management, we’ve managed to return it to quarterly growth for the first time in five years,” GVC CEO Kenny Alexander explained in an interview.
Alexander admits to being “surprised” by the good news. He ascribes the turnaround to new management, more management focus on online poker, and “far more intensive marketing and CRM in particular.”
Although GVC only gained legal control over bwin.party on February 1 this year, it has had an influence on bwin.party operations ever since the deal was agreed to by shareholders.
Since the takeover, partypoker has introduced a number of changes which may have contributed to better revenues.
A week after GVC took control, it announced that bwin.party would re-enter 21 markets which it had previously exited due to regulatory or commercial issues.
Two weeks after GVC took control, partypoker scrapped its last withdrawal fees. Charges had largely been ended the previous July, but fees remained on Neteller, Skrill, and Webmoney withdrawals, some of the most popular means of cashing out. Players greeted the end of charges on these transactions with enthusiasm.
In late February, partypoker ran its first Powerfest tournament series. The series was more than just a re-named version of the former Pokerfest series. It exploited the strong brand value of its ambassador Carl Froch, a former world champion boxer, familiar to many players in its key UK market, and it put up a headline-grabbing $5 million in tournament guarantees.
The previous Pokerfest series had fewer tournaments and only guaranteed $2.5 million in prize money.
Partypoker is also deepening its relationship with UK casino Dusk Till Dawn. There is now a low buy-in version of the live Grand Prix Poker Tour (GPPT) tournament series and the GPPT itself is benefiting from a $500,000 guaranteed event which will be played online.
One of the most significant changes has been the introduction—the very belated introduction—of a lottery style SNG in the form of the Sit & Go Hero.
The new tournament format takes a different line on the lottery SNGs offered by its competitors. It is a four player tournament, rather than three, and one of the players is randomly allocated a bounty which the other players can win if they knock him out.
The additional revenue potential of the new format is far from insignificant. Amaya financial results have shown that the PokerStars Spin & Go has had a massive impact on driving new revenues.
The preliminary trading statement adds one more significant piece of information regarding online poker. GVC’s SportingBet poker room will be migrating to the partypoker platform.
The decision is part of the cost-saving measures which GVC lists, that also include migrating the GVC sports betting business onto the bwin.party platform, and terminating all sponsorship programmes.
Bwin.party is a major sports sponsor, with high profile deals in place across Europe and in New Jersey. In particular, bwin.party sponsors Manchester United, the world’s most valuable football brand.
Other cost cutting measures will include finding operational efficiencies in customer services, IT and marketing functions and integrating some back office functions. Over and above existing plans to dispose of part of the Kalixa payment processing business, GVC will “review non-core assets and may identify some for disposal in due course.”
Total net gaming revenue for 2015 came in at €247.7 million, comprising €133.9 million from sports betting and €113.9 million from gaming. Customer revenues coming from Europe represented 86.8 percent, with the rest from Latin America and emerging markets.
Annual profits for 2015 were €24.7 million, down over 39 percent from the 2014 figure of €40.6 million. Notably, exceptional expenditure of €23 million on the acquisition of bwin.party more than accounts for the difference.
GVC also noted exceptional expenditure of €1.2 million in payments to Romania. The payment is a requirement of the Romanian gaming license and consists of an approximation of back taxes prior to the issue of a license.
The double whammy of the UK’s point of consumption tax and the European VAT directive cut another €12.4 million from top line profits.
Preliminary figures for the first quarter of 2016 show the immediate impact of the bwin.party acquisition.
Total net gaming revenue of €167.7 million is up by 180 percent compared to GVC’s standalone figures for Q1 of 2015. Average daily net gaming revenue is up by 18 percent for GVC brands and by 11 percent for bwin.party brands.
The group says that it is “on track” to deliver €125 million of synergies by the end of 2017.
Concluded CEO Kenny Alexander:
“GVC has never been in a stronger position going forward. The enlarged Group is already enjoying encouraging trading, resulting from our unique mix of diversified products and strong brands.
There is much work to be done, nevertheless, with GVC brands and bwin.party brands (including PartyPoker), growing, together with synergy benefits, we look forward with confidence to another successful year.”