Gaming VC: Sports Betting Hot, Bingo Not

18 September 2008

Kenneth J. Alexander, the chief executive of Gaming VC Holdings, told IGamingNews this morning that although the company's largely Italy-focused sports betting proposition has driven first-half growth, initial results from bingo -- a more recent addition to the stable -- have been disappointing.

Still chief among company's revenue segments, however, its Germany-facing casino offering generated revenue of 108 million euros, down 6 percent against the first half of last year.

"Well, I think the first half of 2007 was a pretty exceptional trading period for Casino Club (its dot-com casino)," said Mr. Alexander, when asked about the year-on-year decline. "And also, there were some heavy losses by high rollers in that first quarter of last year."

In May 2007, the company discontinued its direct-mail marketing services to German residents and has since transitioned to online affiliate marketing, which Mr. Alexander said has kept casino player volumes steady.

"There was a debate about what would happen when we ended the direct mail -- you know, would the business collapse in a heap, or would be able to maintain volumes at historical levels.

"I think if you look at H2 2007," he continued, "we were actually able to grow the business, so it stabilized the casino volumes, and now they're looking to kick on like some of the volumes we witnessed last year."

The company's own-brand sports book, which launched in the second half of 2007, generated revenue of 19 million euros against 9 million euros last year -- growth which Mr. Alexander attributed to sound, localized management in Italy.

Revenue from poker -- a sore spot in most conversations among operators these days -- was up 50 percent to 15 million euros against the second half of 2007.

"It's a tough, tough environment, poker, and if you're not taking U.S. players, then you're on unlevel playing ground," allowed Mr. Alexander, echoing many of his contemporaries during a year when few have rosy poker tales to regale.

"Unlevel playing field" is a phrase oft-seen this year on results statements when operators assess the online poker landscape -- particularly when referencing the perceived disparity between companies that serve Americans and those that don't.

When asked whether there was any potential upside for non-United-States-facing poker operators, most especially with regard to potential affiliate deals, Mr. Alexander remarked:

"Not really because, firstly, I think most of the big, big poker affiliates -- they're there to make money. If I were to list the top 30 or 40 poker affiliates, I'm pretty sure they're dealing with PokerStars and Full Tilt.

"In that respect," he went on, "I don't think that -- not that I'm aware of -- affiliates are being particularly sensitive in dealing with the operators that are taking U.S. business. I haven't seen that trend to date."

Mr. Alexander did indicate, however, that since obtaining a skill-games license in Italy, its proposed poker offering has been approved by the country's regulator, Amministrazione Autonoma dei Monopoli di Stato, and should be online before yearend.

Trading in Gaming VC's Spanish-language, female-targeted bingo offering, meanwhile, has been disappointing since its launch in June. While metrics were not made available, Mr. Alexander explained that the company has yet to market the offering meaningfully.

"Generally, there's a fair amount of traffic coming to the site, but we haven't seen the conversion into funded signups and subsequent revenue," he said. "Once we start seeing some positive results, we'll definitely crank up the marketing thereafter."

Much discussed in recent weeks has been the dissolution of buyout talks between it and an unnamed third-party. When asked to comment on whether the buyout was management-led -- as rumor had -- Mr. Alexander declined.

All told, the company made a profit of 10.3 million euros.

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