CEO: 2013 a “Major Year of Transition” for Bwin.Party

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On Friday morning, Bwin.Party’s co-CEO Norbert Teufelberger and CFO Martin Weigold held a Q2 2013 post-earnings conference call.

The earnings call transcript can be found on Seeking Alpha.

Teufelberger spoke candidly about the company’s short-term goals, many of which revolve around its foray into regulated markets and new product development.

PartyPoker will be ready to go live in New Jersey on day one

Teufelberger spoke at some length regarding Bwin.Party’s presence in New Jersey:

“Key strategic developments in the first half included operationalizing our launch into New Jersey and since the half-year we have submitted all the relevant documentation to the regulators and started to install the online gaming service in the Borgata Casino in Atlantic City. We are on track to meet the expected launch date in the final week of November.”

In addition to setting up shop in the Garden State, PartyPoker’s executives are keeping a close eye on “soon to be regulated markets.”

This is good news for those who remember PartyPoker as hosting the best games in cyberspace. PartyPoker withdrew from the US market in 2006, shortly after the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA).

Since Party Gaming merged with Bwin shortly before Black Friday – March 31, 2011 to be exact – the publicly traded company has not fared particularly well, in part because it can’t take the same risks of a privately held company like say, PokerStars.

Teufelberger: “growth in 2014”

Despite having a rough 2013, Teufelberger expressed confidence that Bwin.Party will return to its profitable ways by next year. He cites a focus shift that emphasizes quality over quantity, “better and more efficient software development”, and the aforementioned venture into regulated markets as the keys to increased prosperity.

Teufelberger mentions a “string of new features” and “project innovations” but does not go into specific detail regarding the exact nature of these upcoming developments.

Notes from earnings call

That’s not to say Teufelberger and Weigold do not reveal anything about the company’s future. Summarized below are several interesting points regarding Bwin.Party’s revenue woes and paradigm shift:

  • The company has adopted the “Agile methodology.” Agile is a series incremental and iterative software development processes that allows businesses to release software updates on a more consistent basis. Teufelberger states that by “embracing the Agile method” it will “enable [Bwin.Party] to increase [its] productivity significantly over the next 12 months.”

  • Bwin.Party plans to tailor its marketing strategy around “direct consumer engagement” as opposed to “acute brand awareness.”

  • First half revenues fell by 16%, down to 342.5 euros.

  • A 5% turnover tax on German sportsbetting contributed to an increase in Bwin.Party’s gaming taxes, reducing its earnings before interest, taxes, depreciation and amortization by 34%.

  • The turnover tax also contributed to an overall decline in sports wagers placed – 53% in Germany.

  • Casino and gaming revenue “fell by 21% to 112.2 million (euros)”

  • Poker revenue “fell by 35% to 63.9 million (euros).” Weigold speculates that “a turnaround in poker performance is likely to take a while” since players must first become acclimated with the new poker product’s features and layout.

  • Despite rolling out new software and entering the US market, Bwin.Party expects “full year revenues to be between 14% and 17% lower than 2012.”

- Robert DellaFave is a game designer and avid poker player. He writes for several publications centered on legal US online poker and the regulated online gambling industries in New Jersey and Pennsylvania.
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