Twelve months ago tough new restrictions came into force in the US clamping down on internet gambling, prompting many to claim a death sentence had been passed on some UK online gaming operators.
The US Congress passed the Unlawful Internet Gambling Enforcement Act, which came into force in November 2006, making it impossible for PartyGaming and a clutch of other British online betting businesses to collect revenues in the US.
Sportingbet lost 95% of its profit virtually overnight. Its share price plummeted from 400p a share to 40p in the space of a few weeks, while PartyGaming, which had derived 75% of its revenues from the US, saw its shares drop 64%. Faring slightly better was 888 Holdings: the US had represented just 55% of its business.
A year of ‘transformation’
Yet not only are companies still operating, they say they are beginning to thrive as necessary changes of strategy have transformed their businesses. A PartyGaming spokesman has described the last year as a period of “transformation” for the group, whose brands include PartyPoker.com, PartyCasino.com and PartyBingo.com. “We have gone from being a largely one product, one currency, one language company – poker, dollars and English – to being multi-product, multilingual and multi-currency,” he says.
It has increasingly focused on entering into strategic alliances and acquisitions. At the beginning of 2006 it acquired Empire Online Limited (EOL) and Intercontinental Online Gaming (IOG). Both deals brought a number of casino brands coupled with European marketing expertise, which have helped shape PartyGaming’s offerings to suit the European market. Experts say it is likely it will look to develop its market in other territories, especially Asia.
Rival 888 Holdings has pursued a similar partnerships route and last week announced it had an arrangement with Blue Square, part of the Rank Group, to provide a multilingual sports betting operation. The company introduced its first sports betting service in Italy last month and is set to expand throughout Europe and Latin America.
The introduction of the Gambling Act 2005, which came into force earlier this year, led to a voluntary code being drawn up that will see an end to gambling logos on children’s replica kits. The decision has led 888 to rethink its sponsorship of Middlesbrough Football Club and focus instead on the new broadcast opportunities introduced by the Act, launching a TV campaign, created by CHI & Partners.
Meanwhile, Sportingbet – the hardest hit of all the UK companies – has been rebuilding from the foundations up. It closed operations in Costa Rica and London and consolidated services in Dublin and Guernsey.
Sportingbet chief operating officer Dave Hobday has a strong vision of how he sees the company evolving. “We believe if we’re going to drive forward with our aspirations to become mass-market online retailers, a kind of Amazon of gaming, customer service is absolutely critical,” he says.
The company has invested in developing its sites and products, such as in-match “live” betting, in order to increase cross-portfolio spending. Sportingbet’s business is now split between its core sports betting and its softer, more leisure-based casino and gaming products under the Paradise brand.
Sportingbet says customer-friendly interaction is at the heart of its drive to improve customer experience and making it easier for them to spend more. Such initiatives could help Sportingbet deliver its City target of £21m profit next year, from the £7.4m profit it has just announced for this year. As PartyGaming’s spokesman says: “What happened, happened. Life goes on.”