Austria’s Bwin, U.K.’s PartyGaming to Merge “Out of Necessity”

Austria-based Bwin Interactive Entertainment and U.K.-based PartyGaming are merging to form the world’s largest publicly traded Internet gambling company, a move observers see as the first consolidation of many in the international market. 

While in the short term, the Bwin/PartyGaming merger is about adapting to changing in Austrian gambling laws, and just about everywhere in Western Europe, the long term has this new online gambling giant looking across the ocean to America, a country which has no taxation or regulation scheme in place. 

“We will immediately be a leader in [the European and U.S.] markets as they open up,” said PartyGaming CEO Jim Ryan in a conference call to investors yesterday, adding that “We’re very excited about the U.S. opportunity.” 

PartyGaming is certainly quite anxious to return to the U.S. should current American gambling laws be relaxed. Before the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006, PartyGaming was the no. 1 poker website in the world, mostly based on participation in its American poker room. PartyGaming stopped accepting U.S. players shortly after UIGEA and took quite a hit financially. 

In 2009, Bwin and PartyGaming reported combined revenues of €682 million ($893 million), but the merger is still seen by some as necessary to survival. Global Betting and Gaming Consultant CEO Warwick Bartlett told the New York Times that the two companies are “going from a no-tax environment to a high-tax environment [in Europe], and that’s challenging. This is a deal that’s being made out of necessity rather than choice.”