The deal announcement explained that the terms of the agreement “include options that can further deepen the parties’ strategic relationship, pending further expansion of online gaming in the United States and/or CIE’s strategy in New Jersey.”
Caesars Interactive Entertainment (CIE) operates the online gaming business under Caesars and WSOP brands.
Kevin Vonasek, NYX’s chief product officer Americas, indicated that NYX anticipates further U.S. expansion.
“CIE is absolutely a key partner for NYX as we continue to execute our US strategy in anticipation of future casino iGaming expansion beyond New Jersey, Delaware and Nevada. This agreement is a testament to both the quality and flexibility of our platform and the exceptional working relationship we’ve enjoyed with CIE to date.”
NYX has had a very busy year in terms of corporate acquisitions and disposals. The company’s largest acquisition is the purchase of OpenBet for £270 million ($370 million) which completed on May 20.
The deal increases the range of games that NYX can offer to its B2B customers by over 2,000 games. Prior to the deal, NYX could offer around 700 games from its own portfolio or via deals with third parties.
Chief Executive Matt Davey said:
“The acquisition reinforces our position as the leading provider of regulated B2B digital gaming solutions.”
Furthering that position is the subsequent deal to buy BetDigital, a much smaller deal at a price of £24.5 million ($32.4 million), but significant in terms of the additional development capacity NYX can deploy.
Betdigital is a creator of content and systems for online, mobile, interactive TV and land-based gaming platforms mainly focused on the U.K. market. It adds a game development platform and studio, and gives NYX “the ability to further exploit opportunities for games development and leverage existing NYX studios for game design and art.”
When the OpenBet deal was announced in April, NYX added that it had sold the Ongame online poker network to an unnamed third party. The buyer is “a partner with proven experience in the industry,” who will take on “all costs, customer contracts and development for the poker product.”
Significantly, NYX retains “exclusive rights to use the poker product across North America.” NYX will also continue as a minority shareholder in Ongame.
The deal with Caesars in New Jersey built on a two year relationship that NYX had already established. Since online gaming regulation was introduced in the state, NYX has become an important supplier to many of the licensed operators.
In December 2015, the Golden Nugget’s online casino went live on NYX’s platform, and when PokerStars launched in March, its online casino included 20 games from NYX’s NextGen studio. NYX supplies both PokerStars and Full Tilt with casino products for their dot-com sites.
Sam Hobcraft, director of casino at PokerStars, said:
“NextGen slots have proven to be very popular with our customers in Europe and so we are pleased to be able to offer these games in New Jersey.”
The current U.S. online poker markets in New Jersey, Delaware and Nevada are unlikely to provide an opportunity for NYX to take advantage of its rights to use Ongame. Any new online poker operators are likely to be turned off by the small scale of the opportunity.
However, with legislation pending in California, Pennsylvania, New York and Michigan, there is a strong possibility that new industry players will try to enter the regulated online poker market if and when new laws are passed.
In California, the sheer size of the market makes it likely that many operators will seek an online poker license. This creates an opportunity for NYX, since the tribes and poker clubs don’t have their own online poker platforms and will need one quickly.
New York has around half the population of California, but is twice the size of New Jersey. There could be space even in a poker-only model for one or two additional licensees over and above those active in New Jersey. Again NYX could fill the gap.
In Michigan and Pennsylvania, the ability to offer a complete package of casino and poker may be attractive to one or more of the land-based casinos looking for a market position, but realistically, the market for NYX is more likely to come from its casino games.
Both states are too small to sustain more than three or four online poker brands, and competition from the operators licensed in New Jersey is likely to deter new market entrants.
Whether the Ongame rights prove to be valuable or not, NYX has positioned itself to take substantial benefits from any future state regulation of online casino games.