2014 World Cup May Help Bwin.Party Increase Revenues after Difficult 2013
Bwin.Party hopes the 2014 World Cup in Brazil will help it have a year of growth after a decline in 2013. The world’s largest online gambling company had a difficult 2013, because the company could not
The 2014 FIFA World Cup should become the main focus for sports gamblers this year, as it does every four years. The month-long, international football tournament will see 32 teams from around the globe playing for the most prestigious championship in world sport.
Sports Betting at a Four-Year High
Gamblers from those 32 countries will take a special interest in the matches, though the event transcends international boundaries, so gamblers from over 180 nations are likely to gamble on the event. Many of the countries most involved in the competition allow for legalized sports betting online, so the Bwin.Party websites are expected (like many others) to have a significant spike in revenues. The 2014 FIFA World Cup is expected to break records for bookmaker sites.
After the Bwin and Party brands merged in March 2011, the resulting Bwin.Party Digital Entertainment became the world’s largest publicly traded online gambling company. The company owns a variety of online casinos, poker sites, and sports books.
Gambling Laws in Greece
A major part of the gaming company’s problems in 2013 was its location inside the Greek market. Faced with the world financial crisis of 2008, the Greeks instituted a conservative approach to their governmental budget, shutting down most deficient spending. With no bailouts for their beleagured economy between 2008 and 2013, Greek unemployment rose from 7.8% up to 27.9% in June 2013. Youth unemployment reached a dismal 64.9% in May 2013.
Faced with an economic meltdown, Greece instituted protectionist laws. Greek politicians passed a number of laws against international-based online gambling, hoping to protect its own gaming monopolies. With the collapse of the Greek economy, it was inevitable that local regulators would try to find ways to keep money from flowing out of the country to international operators. Companies like Bwin.Party and Betfair fought the Greek government in international courts, but they were forced to move operations out of the traditional haven for online gambling interests.
Bwin’s gross earnings fell to 108 million euros or $150.17 million in 2013. In 2012, those same numbers were from 165 million, so the company faced a nearly 40% decline of revenues. Executives at Bwin.Party say the decline was due to falling revenue and higher gaming taxes in Germany, as well as start-up costs for their much-anticipated New Jersey operations.
Gambling Laws in New Jersey
Bwin.Party is now focusing on countries with more defined and steady gaming laws. Like any business, investors and business executives alike want to focus on potential investments which are predictable. Having clear cut gambling laws is essential for the long term health of a gaming operator.
Sensing the trends and taking calculated risks sometimes makes sense. Bwin.Party is beginning to invest in the future of US gambling laws, hoping to get in on the ground floor of the state-sanctioned online gambling in New Jersey. The US market is so large that it offers a massive financial upside, despite the unpredictable state and federal gambling regulation over the years.
Starting in 2012, several U.S. states began to legalize online gambling. The first such state was Delaware in 2012, which allowed its three horse track casinos to operate legal iGaming websites. In 2013, Nevada and New Jersey voted to allow its land-based casinos to operate iPoker sites and online casinos.
The startup costs of founding a brand new online poker site and online casino targeted specifically at New Jersey gamblers is significant. But Bwin.Party’s work with Borgata Online Casino is showing early dividends. Borgata received as much as 50% of the revenue among all the Atlantic City online operators in the early months of New Jersey’s experiment with iGaming.
While those numbers have declined to about 40% in the last couple of months, that was to expected as more gambling operations came online and worked through early bugs in their system. While New Jersey online gamblers have said they prefer the software at one or two other websites, they Borgata Online rooms have received high praises for their high quality appearance and ease of use.
As the months pass in 2014, it is expected the startup costs should be far outweighed by the revenues. Despite the good signs, it it the 2014 FIFA World Cup which Bwin hopes to provide the biggest boost to their bottom line this fiscal year.
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