Betting Boosts Bwin's Bottom Line

21 August 2008

Bwin Interactive Entertainment, the Vienna operator, revealed second-quarter net revenue of 104.7 million euros, up 39 percent against the previous-year period.

Net gaming revenue -- a metric measuring revenue from the company's sports betting, poker, casino and games offerings -- rose 32.7 percent to 88 million euros versus the second quarter of last year. Other revenue -- which comprised rights sales, customer fees and other items -- came in at 16.7 million euros.

Significantly, second-quarter sports betting revenue delivered 58 percent growth year over year, coming in at 50.4 million euros. Sports margins, however, were down slightly quarter over quarter to 7.9 percent from 8.7 percent.

"While Bwin's margin was better than a year ago, they obviously were more impacted by Spain and Germany progressing so far in the Euro, and their bonus rate [11.3 percent of gross gaming revenue] was higher than in any other quarter since 2006," Simon J. Holliday, a partner with Global Betting and Gaming consultants, told IGamingNews in an e-mail.

During the 2008 UEFA European Championship -- 31 matches over 23 days -- the company generated turnover of 221 million euros on a margin of 8.3 percent.

For sake of comparison, during the 2006 FIFA World Cup -- 64 matches over 31 days -- Bwin generated turnover of 263 million euros on a margin of 6.7 percent.

Year over year, second-quarter casino revenue grew 13.7 percent to 15.1 million euros, while poker fell 5.4 percent to 18 million.

"Bwin's results were generally good," Mr. Holliday said. "Poker was slightly down quarter over quarter and we had expected even more of a decline. Casino increased quarter over quarter -- amazing momentum in this product at the moment."

Looking at the company's key performance indicators, new customer signups were up 16.1 percent quarter over quarter but did not compare favorably against World Cup metrics from two years ago.

"Their acquisitions of 296,000 were nowhere near the 430,000 they achieved during Q2 2006," Mr. Holliday said. "They have obviously been a little more conservative with the marketing spend [37 percent of gross gaming revenue in the second quarter].

"The cost per acquisition [166 euros during the second quarter] is good," he continued, "but after the World Cup in 2006 (which stretched across Q2 and Q3) activities returned to what would have been expected by Q4. So the jury is still out on whether they can monetize these players in Q3/Q4."

Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.