PartyGaming signs with Danske Spil to provide online gaming in Denmark

More positive news for online poker in Europe: Denmark’s state-operated Danske Spil has signed a 5-year agreement with PartyGaming, who will use their expertise and know-how to offer online gaming to the Danish market.

Denmark’s relationship with gaming, particularly online gaming, has been patchy through the years: while live poker tournaments were considered perfectly legal, online poker was frowned upon by the Danish Supreme Court until very recently. The Danish gaming system, Danske Spil, enjoyed a lengthy virtual monopoly while all foreign gaming companies were forbidden to enter the Danish market fro most of this decade, which sparked a number of disagreements with the European Commission regarding free trade agreements within the European Union.

In 2009, Denmark finally relented and put forth a draft legislation to partially open the Danish poker and casino market, which is expected to pass as law in 2011. Denmark further showed its commitment by allowing the Danish people access to Hollywood Poker’s online gaming facilities. And now in early 2010 the state’s former monopoly, Danske Spil, is partnering with one of the world’s largest online gaming providers to prepare for the upcoming competition.

The partnership between Danske Spil and PartyGaming has everything to make it successful: while the Danske Spil group is one of the largest in Europe, with over 500,000 registered customers and a reported turnover of €1.47 billion (about $2.13 billion) in 2008; PartyGaming bills itself as ” the world’s leading listed online gaming company” thanks to its very successful brands which include Party Poker, Party Casino and Party Bets.

Jim Ryan, Chief Executive Officer of PartyGaming, was understandably glad to announce this new partnership:

This is a landmark B2B deal for PartyGaming and validates our strategy to become a leading provider of B2B services to both corporates and governments around the world. Danske Spil is widely recognised as one of Europe’s leading gambling businesses, one that is pre-eminent in the Danish market. We are delighted that Danske Spil has recognised our expertise and high standards of business practice and we look forward to building a significant and profitable enterprise as soon as the newly regulated Danish online gaming market opens.

Ryan has every right to be delighted: Danske Spil researched the market for seven months to find a partner who met their exacting standards for security, ethics and of course quality. Their choice of PartyGaming is an endorsement of the highest possible level of the company’s expertise and capability. H.C. Madsen, CEO at Danske Spil, said of this new partnership:

With some of the world’s leading products in online poker and casino as well as a large international customer base, PartyGaming is definitely a strong business partner for Danske Spil. Combining this with Danske Spil’s unique and strong position in the Danish market with more than 500,000 Danish online customers will guarantee that together we will deliver a highly attractive customer experience to players in Denmark.

One issue that remains to be clarified is how the notoriously strict Danish taxation system will treat new gaming providers as they enter the market. Taxes on poker winnings are remarkably high on Denmark – for example, WSOP champion Peter Eastgate could only spend $2.5 million out of the $9.1 million he won with his bracelet, the rest going to the government’s arks. Companies willing to offer online poker will have to jump through hoops to be on the government’s exclusive no-tax list, meaning that players will not be taxed over their winnings on those sites. Hollywood Poker currently enjoys no-tax status, and it is to be expected that Danske Spil’s upcoming online poker venture will enjoy it too.

PartyGaming’s shares (LSE:PRTY) last traded at 279.3 pence per share in London today.

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Useful poker terms:

RAGS - Board cards that are small, not suited and not in sequence, e.g., 9-5-2. When "rags flop", it is unlikely that anyone has a good hand, except possibly the big blind in an unraised pot.
CALLER - One who calls. Sometimes used collectively, as in "3 callers".
BIG BLIND - A blind bet, usually a raise of an earlier blind which would be called the SMALL BLIND. In limit poker, the BIG BLIND is usually the size of the minimum bet on the first round of betting.
TOP TWO PAIR - In flop games, having hole cards that make the highest possible two pair hand.
COMPUTER HAND - Texas Hold'em hole cards of Q-7 offsuit. More generically, any hand that computer analysis/simulation determines is positive but turns out to be difficult to play in practice.
HOOK - A Jack. So named because the "J" resembles a hook.

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