GVC took over PartyPoker in 2015, at a time when the business had been declining for several years.
Two years later, and GVC has turned PartyPoker around. In its first-half results for 2018 GVC has reported that PartyPoker grew by 36 percent compared to the same period in 2017.
Year to date and on a constant currency basis, online poker has increased by 41 percent. That makes PartyPoker the fastest-growing brand in the GVC stable.
GVC splits its revenue reports into sports brands and games brands, with poker and bingo on the gaming brands side of that division.
The results release explained that:
“Games brands NGR was 13% ahead, with partypoker.com NGR 36% ahead driven in part by a very successful live events programme and despite the impact of the withdrawal from Australia in 2017. In June we launched shared liquidity across France and Spain. Ahead of shared liquidity and post its implementation, France and Spain have been amongst our fastest growing markets.”
GVC is having the same experience as PokerStars with the introduction of shared liquidity between France, Spain and Portugal. The Stars Group reported that the early months of sharing liquidity had provided growth of 33 percent for its online poker revenues in these markets.
Italy has yet to join the enlarged player pool, but if and when it does, it should have a major effect, comparable to the expected impact of Pennsylvania launching online poker.
GVC completed its purchase of Ladbrokes Gala Coral in March. The acquisition has already been transformational in that it changed GVC from being an online-only company into a company that has a large real estate portfolio of brick-and-mortar betting shops.
It also added an extra online poker room that is being run alongside PartyPoker. Ladbrokes has had a long-standing relationship with Playtech for many years, and offers its online poker on the Playtech iPoker platform.
Part of the results presentation discussed ongoing talks with Playtech about continuing and extending the relationship now that GVC is in charge. GVC CEO Kenny Alexander said that Playtech has a great opportunity for Playtech to expand by putting extra content on GVC sites.
However, there was no mention of whether iPoker players would be migrated to the partypoker platform at any point in the future.
Italy’s new coalition government has introduce a complete ban on all gambling advertising.
The ban comes into force at the end of the soccer season in 2019. CFO Paul Bowtell explained that all the operators in the market will be scrambling for customers in advance of the ban, but that thereafter it will be very difficult to market online poker or sports betting.
Bowtell explained that GVC’s newly acquired portfolio of brick and mortar betting shops will be critical to marketing in Italy in the future.
“I strongly believe that Eurobet with its strong high street presence and, indeed market leading multi-channel capability will be competitively advantaged. Who’d have thought we’d have said that about a retail chain?”
While Eurobet is one of GVC’s sports betting brands, the stores can be expected to market online poker too.
The US is unlike Europe in that very few jurisdictions require online poker operators to partner with land-based casinos, so the major operators have never had the incentive to market through casinos.
The Italian experience may well walk hand in hand with the US experience as GVC learns how to market through land-based casinos.
During the investor call, Bowtell gave a brief regulatory round-up. One point of interest was the reduction of gaming taxes in Spain:
“In Spain we saw online duty reduced from 25% to 20% from July this year, and whilst that’s not a significant saving for the group, it is welcome and could have an interesting read across to the US and serve as an example of how if you get your tax rates too high, you will stifle growth and therefore tax revenues and be forced to bring then down later on.”
The comment is clearly aimed at Pennsylvania which has levied sports betting taxes of 36 percent, together with any other states which might seek to follow Pennsylvania’s example.
Other disastrous European tax ideas reared their head as GVC reported that the Greek tax authorities have imposed a back-tax bill for 2010/2011 of €186.77 million ($218 million).
GVC pointed out that the bill is “substantially higher than total Greek revenues generated by the subsidiary during the relevant periods.”
Any tax system that levies taxes at over 100 percent of revenues is not likely to succeed in promoting business. GVC is appealing the decision.
CEO Kenny Alexander was effusive regarding the opportunity for GVC in US sports betting. He reiterated the key points of the deal with MGM Resorts International, which will see GVC able to offer online poker and sports betting in up to 15 US states, depending on what regulations are introduced.
Alexander feels that the deal with MGM is a strategic win that pretty much guarantees GVC the pole position in the US market:
“We have managed to partner up with the biggest land-based player in the US and there’s no doubt about it, I think we will be the market leader, that JV will be the leader in the US and we will have 50 percent of the profits of that JV, so we have positioned ourselves strategically to give ourselves the very, very best chance of success in this market.”
CEO Kenny Alexander commented:
“The performance of the GVC Group in the first half has been extremely pleasing in what has been a very busy period. Strong momentum in Online and European Retail has continued, and a positive World Cup helped improve trends in UK Retail in the second quarter.
The acquisition of Ladbrokes Coral completed on 28 March and the integration of that business is progressing well. We have now identified capex synergies of at least £30m in addition to the £130m cost synergies and we are well placed to deliver those savings while driving top line growth. We are gaining market share in all our key markets and we will look to reinvest to further strengthen our market position.”