Executives See a Wave of M&A’s for Online Gaming

According to Mitch Garber, chief executive of PartyGaming Plc., the owner of the leading Internet poker site PartyPoker.com, his firm is now interested in buying companies impacted by new U.S. legislation to end online gaming in the country, which was passed by Congress a week ago, though the bill has yet to be signed by President Bush.

"We are very focused on mergers and acquisitions,” said Garber. “Our liquidity is very attractive to smaller players who may not be able to survive on their own.”

MGM, Harrah’s Interested

He also suggested that the rate of consolidation would get faster, with MGM and Harrah's seen as likely to enter the stage.
"I wouldn't be surprised if they didn't have an interest in winning non-U.S. companies as a means of tipping their toes in the Internet world," Garber said.

Another gaming executive, Gigi Levy, who is taking over as head of 888 Holdings Plc., this year, said he reckons consolidation would start off between online operators, but may spread across the gambling spectrum.

“The move would be followed by takeovers by large onshore operators from both the United States and Britain,” he said.
Shares in online gambling companies dropped last Monday on fears of the impact of the U.S. legislation, taking about 3.5 billion pounds off company values. Note: $1=.5336 Pound.

The U.S. House of Representatives and U.S. Senate, surprisingly, approved a bill early last Saturday that may make it illegal for banks and credit-card companies to make payments to online gambling sites.
Analysts believe President Bush will likely sign the law, but note that it will take years for regulations to be developed to actually impact the industry.

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