Crypto Migrates Poker Licensees to IPN Network

As projected by IGamingNews, CryptoLogic Ltd. will migrate its poker operation to Boss Media A.B.’s International Poker Network -- the first in a series of deals one analyst thinks will result in a “super league” for European online poker.

"It’s obvious that these agreements would start to happen,” Simon J. Holliday, director of H2 Gambling Capital, told IGN this morning via e-mail. “We see no room for small operators, especially in poker.”

In a note to the London Stock Exchange, CryptoLogic said it will begin moving its major poker clients to the IPN Network in January.

Excluding World Poker Tour Enterprises Inc. and William Hill, CryptoLogic’s network is home to 10 licensees, the largest of which is thought to be InterPoker.

"I don't think that people recognize the significance that our other customers -- specifically, our Inter group of customers -- represent from a revenue standpoint for CryptoLogic," Justin Thouin, the company’s vice president of business development and product management, told IGN recently. "They are far, far in excess of the contribution that William Hill makes to CryptoLogic."

Mr. Holliday suggested the CryptoLogic deal is a forerunner of further consolidation in the poker industry.

More deals are expected once network operators like PartyGaming, Sportingbet and 888 Holdings conclude settlement negotiations with the United States Justice Department, the credit market thaws and stocks stabilize, Mr. Holliday said.

CrytpoLogic said the deal will knock between $12 million and $15 million in annual costs off its P&L.

"Despite the recent share price decline and positive news, we remain cautious on the name in the near term as we look for a couple of tough qtrs as the company transitions its business model," Todd Eilers, an analyst with Roth Capital Partners in California, wrote in a research note today. "Longer term, we believe the company will likely emerge from the transition in a much better competitive position and a more profitable business."