City Index Deal Not a Difference Maker for Party, Analyst Says

1 July 2008

With its City Index deal, PartyGaming is trying new markets and looking to partners outside the world of online gambling for growth, but one analyst says a financial spread betting offering may not be a difference maker for the Gibraltar-based operator.

In an alliance with City Index, a spread betting company based in London, PartyGaming today launched PartyMarkets, a Web site offering financial spread betting and contracts-for-difference trading.

John Shepherd, director of corporate communications for PartyGaming, told Interactive Gaming News the alliance with City Index was a logical extension of Party's existing online gaming franchise.

"Customers who engage in spread betting or trading really are quite sophisticated," Mr. Shepherd said. "And they are also well informed because what they are doing is betting on events in real time, often very quickly."

The City Index deal is the second company outside the realm of online gambling with whom Party has formed an alliance in the last year. In September 2007, the company grew an existing affiliate relationship it had with iTV, the United Kingdom-based television network, to provide a suite of online bingo and poker brands.

"Where we did our alliance with iTV, we formed a bridge between the Internet and television, which recently saw iTV launch a nightly bingo program called 'Bingo Night Live,' " Mr. Shepherd said."What we've built here is a bridge between traders and online gamers -- two different types of customers, but where the common denominator lies is that they like to bet."

Under the recent deal, City Index developed the platform for PartyMarkets and will continue to provide financial information and prices, including markets from the United Kingdom, Europe and Asia for the site.

Financial spread betting is new territory for a company whose strength has primarily been in poker and casino games, and Mr. Shepherd admits the company has a lot to learn.

"We've got a new set of customers," he said. "We've got a new set of regulations because it's regulated by the Financial Services Authority in London. But we're fairly familiar with the workings of the F.S.A. given that we are a stock market-listed company."

In the United Kingdom, all spread betting is regulated by the Financial Services Authority instead of the Gambling Commission.

Simon Holliday, a partner with Global Betting and Gaming Consultants, told IGN in an e-mail Tuesday that PartyMarkets may not be the biggest thing to happen for PartyGaming during the second half of 2008.

"Many of the companies appear to have a bit of a scatter gun approach at the moment," Mr. Holliday said. "In the strongest periods growth the most successful companies have focused on particular products and markets."

Mr. Holliday said that while financial spread betting is a bigger market in the United Kingdom than sports spread betting, for instance, it's still only an effort to bring marginal growth through and already existent customer base.

He added that he hoped Party had bigger plans for the future.

Emily Swoboda is the senior staff writer at IGamingNews. She lives in St. Louis, Mo.