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Mixed Financial Results Raise Questions about Online Gaming in Europe

Many different companies have released there financial reports for July of this year or for the first half of 2013 recently and the news overall has caused some industry insiders to worry about the health of the online market, especially in Europe.  There were some good results mixed in though, and that alleviated some concerns, but overall the reports were not encouraging, and as a result many people are worried that poker in Europe might be in some trouble.

Bwin.Party, one of the biggest online sites, reported losses across the board year-over-year measuring the past six months ending in June according to  earnings before interest, tax, depreciation and amortization was down by nearly 33% from last year this time, while revenues were down 16%, sales were down in every division including poker falling over 30 million pounds to 62.3 million.  Sports betting and bingo were no better though as they saw major declines as well, but not near as severe as those saw in the poker section of their offering.

Bwin.Party did offer some optimism saying that they are focusing on markets that could be significantly more profitable than the ones that they are currently in, and that they are implementing changes to the software that will allow for more efficiency and should help keep costs lower and allow revenues to increase. This probably includes getting the real money site off the ground in the US, which was slated to open in Summer of 2013, but still hasn’t started offering real money gaming.  It will be important to see if this comes to fruition however; as you wouldn’t expect them to say things are not going to turn around.

Fortuna Entertainment Group posted an impressive rise in profits though during the first half of 2013 with a nearly 34.5% increase in net profit.  They serve mostly Central and Eastern Europe as a retail sports book.  This large increase in the region is exceptionally encouraging as many industry insiders have pegged it as a major growth area, so seeing any decline in the region would be less than encouraging for Europe as a whole.

Greek gaming monopoly OPAP demonstrated that they are being hit hard by the financial problems that are currently gripping Greece by seeing a decline of 73.9% in net profit.  This massive nosedive seems to indicate rising costs associated with doing business, because revenues fell only 15.1%, which is microscopic compared to the total fall in net profits seen by the company.  This shouldn’t come as a huge shock considering the problems seen in the Greek economy as a whole and massive unemployment rates experienced by the citizens of the country, however, it’s still not encouraging news.

Another interesting tidbit is something that doesn’t have to do with financial reports about companies, but instead has more to do with factors that can provide insight into the mood of the public surrounding the games.  In the UK during July of 2013 search queries for gaming based terms was down 34% to fewer than 1 million total searches on Google alone.  These search terms included: sports betting, casino, poker and bingo.  Marketers like to point to these types of behaviors as an overall indicator of what people are looking for, and the overall health of different industries.  If they are correct in their thoughts, then this could be a major problem for the industry as people are not looking for sites to join or more information.

 This information taken as a whole provides an interesting picture of what gaming in Europe is looking like currently.  The rise in Central and Eastern Europe seems to be on track with what players and companies are assuming, but the sharp contraction of the UK market could be coming as a bit of a surprise and appears to have caught some companies off guard as they are trying to expand a little later than what would have been optimal.  Sites like Bwin.Party are also showing more problems as they have been unable to expand into the regulated US market or properly diversify themselves into other regions of the world.  It’s going to be something that everyone who plays poker should pay attention to, because knowing what sites are really attracting the new players will mean potentially getting the new fish before everyone else.

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Andrew Schupick