GVC Says PartyPoker Is Fastest Growing Brand In Solid First Half Report

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GVC took over PartyPoker in 2015, at a time when the business had been declining for several years.

Two decades afterwards, 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, internet poker has increased by 41 percent. That makes PartyPoker the fastest-growing brand in the GVC stable.

European liquidity that was shared has driven online poker Development

Its revenue reports split into sports brands and matches brands, with bingo and poker on the gambling brands side of that division.

That was explained by the results release:

“Games manufacturers NGR was 13% ahead, with partypoker.com NGR 36% ahead driven in part by a very successful live events programme and despite the effect of the withdrawal from Australia in 2017. In June we found shared liquidity across Spain and France. Ahead of shared liquidity and post its execution, France and Spain have been one of our fastest growing markets.”

GVC is having the same experience as PokerStars with the introduction of shared bandwidth between France, Spain and Portugal. The Stars Group reported the early months of sharing liquidity had supplied 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 launch internet poker.

If Pennsylvania joins the shared liquidity pool with Nevada, Delaware and New Jersey it will be doubling the market size.

Ladbrokes adds GVC and iPoker

GVC completed its purchase of Ladbrokes Gala Coral in March. The acquisition has already been transformational from being an company, in that GVC shifted into an organization which has a large property portfolio of gaming stores that are brick-and-mortar.

It also added. Ladbrokes provides its poker, and has had a relationship for decades with Playtech.

Part of this results presentation discussed continuing talks about extending and continuing the connection that GVC is in charge. GVC CEO Kenny Alexander reported that Playtech has a great opportunity for Playtech by putting content on GVC 22, to expand.

There was no mention of if iPoker players could be migrated at any point in the future into the partypoker platform.

GVC real estate will likely be customer acquisition tool in Italy

The new coalition government of italy has introduce a comprehensive ban on all advertising that is gambling.

The ban comes into force at the end of the football season in 2019. CFO Paul Bowtell explained that the operators in the market will be scrambling for clients ahead of the ban, but thereafter it will be very difficult to market online poker or sports gambling.

Bowtell explained that the recently acquired portfolio of brick and mortar gambling shops of GVC will be crucial to marketing in Italy in the future.

“I strongly believe that Eurobet with its strong high street presence and, indeed market leading multi-channel capacity will be advantaged. Who would have thought we’d have said that about a retail chain?”

The stores can be expected to advertise online poker while Eurobet is one of GVC’s sports betting brands.

The US is unlike Europe in that few jurisdictions require internet poker operators to associate with land-based casinos, so the major operators have never had the incentive through casinos to advertise.

As GVC learns how to advertise through casinos, hand in hand may well walk with the US experience.

US taxes could learn from Europe

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 is not a substantial 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 so tax revenues and be made to bring then down later on.”

The comment is clearly aimed at Pennsylvania that has levied sports gambling taxes of 36 percent, together with any other countries which might seek to follow the example of Pennsylvania.

Other disastrous European taxation 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 greater than total Greek revenues generated by the subsidiary during the relevant periods.”

Any tax system that levies taxes at is not likely to be successful in promoting business. GVC is appealing the decision.

US sports gambling and poker growth

CEO Kenny Alexander was effusive regarding the opportunity for GVC in US sports gambling. He reiterated the key points of the deal with MGM Resorts International, which will see GVC able to offer online poker and sports gambling up to 15 US states, depending on what regulations are introduced.

Alexander believes that the deal with MGM is a win which guarantees GVC the pole position in the US market:

“We have managed to partner up with the largest land-based player in the usa and there’s no doubt about it, I believe we will be the market leader, which JV will be the leader in the united states and we will have 50 percent of the profits of that JV, so we’ve positioned ourselves strategically to give ourselves the very, very best chance of succeeding in this market.”

GVC financial highlightsProforma Group net gaming revenue up eight per cent at #1,717.0 million ($2,250.3 million)Proforma Group revenue up eight per cent at #1,694.3 million ($2,220.8 million)Proforma Group underlying EBITDA up 11 percent at #349.5 million ($458.1 million)Proforma Group underlying operating profit of #277.9 million ($364.3 million) up 17 percentGood momentum in online with market share gains in all key territories; NGR up 18 percent (+20 percent in constant currency (“cc”); sports brands +19 percentage (+21 percent cc) and matches brands +13 percentage (+15 percent cc)UK retail like-for-like NGR -3 percentage; a fantastic World Cup helping offset the effects of bad weather in first halfEuropean retail NGR +29 percent (+26 percent cc) with strong growth in ItalyPositive World Cup tournament driven by both gross profit margin and volumesCompleted the acquisition of the Ladbrokes Coral Group on March 28; Capex synergies of at least #30 million now identified. Integration progressing well and on target to reach 130 million cost synergies by 2021.

CEO Kenny Alexander commented:

“The performance of the GVC Group in the first half has been extremely pleasing in what’s been a very busy period. Momentum in Online and European Retail has continued, and a favorable World Cup helped enhance tendencies.

Ladbrokes Coral’s acquisition completed on 28 March and the integration of that business is currently progressing nicely. We have identified capex synergies of at least #30m in addition and we are well placed to deliver those savings while driving top line growth. We’re gaining market share in our key markets and we will look to reinvest to further strengthen our market position.”

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