888 CEO: Merger Talks “Highly Likely”

888 Holdings CEO Gigi Levy told eGaming Review Tuesday that it was “highly likely” that his internet gaming company would engage in merger discussions with other companies in the industry within the next six months. While most would agree that such a move appears to be a case of “keeping up with the Joneses” in light of the recent PartyGaming/bwin merger announcement, Levy told eGaming Review that the union of his competitors is not changing 888′s marketing tactics.

“I think that the first thing to remember is that the consolidated Party-Bwin, when the transaction is completed, will represent less than 10% of the market,” Levy told the online gaming news site. “We are not talking about someone controlling 50% of the market, giving us no chance to compete. We are talking about an entity which is significantly larger than us, but still is less than 10% of a very fragmented market. In that regard, I don’t see us changing anything in our strategy because of that.”

Assuming, for simplicity’s sake, that the current player numbers stay the same, the new Party/bwin would be the third largest poker network or room in the industry. According to PokerScout.com, PartyPoker is currently third with a seven-day average of 3,550 daily cash game players, while bwin’s Ongame network is fifth with 2,350. The combined 5,900 would be well ahead of the fourth largest poker entity, the iPoker network, which has a seven-day average of 3,200 cash game players. The new Party/bwin would still be way behind PokerStars (25,600) and Full Tilt Poker (13,800).

Pacific Poker, 888′s online poker room, ranks just 15th, with 910 daily cash game players. Thus, if 888 wants to be a major player in the poker market (keep in mind it does have a strong casino and B2B business), it will have to join forces with one of its largest competitors or several smaller ones. Levy told eGaming Review that it did not know who it would target for a merger, but Ladbrokes is a possibility. While Ladbrokes is one of the bigger players in the online gambling market, it is not when it comes to poker. According to PokerScout.com, Ladbrokes contributes 325 daily cash game players to the Microgaming Network.

Levy’s comments came on the same day that 888 Holdings released its second quarter financial results. Operating income for the quarter was $61 million, the same as it was in the second quarter of 2009. Virtually all of its business units saw their numbers decrease, though, except for bingo, which was up 372% to $13 million thanks to the December acquisition of Wink Bingo. Even its B2B unit, Dragonfish, was down 24% from the same quarter a year ago to $10 million, despite being 888′s top performing unit in 2009. Gabi Campos recently left his post as the head of Dragonfish and has been appointed CEO of PokerStars.

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Poker lexicon:

LIMIT POKER - A poker game wherein the amount to be bet is fixed, or at most variable within a prescribed minimum and maximum. Ant.: NO-LIMIT POKER.
TOP TWO PAIR - In flop games, having hole cards that make the highest possible two pair hand.
READ - To determine whether an opponent has a good, medium or bad hand by observing his personal behavior. An inexact science.
ANTE - A small bet all players are required to make before a hand is dealt. Not all games have an ante. Related terms: BLIND, FORCED BET.
MARKED CARDS - Cards that have been (illegally) altered so that their value can be read from the back.
HOLE CARDS - In Stud and Hold'em, the face-down cards dealt to each player.

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