Party Gaming, Harrah's, MGM looking to purchase smaller on-line sites

[StellarWind]

I see Party and 888 execs desperately trying to divert the attention of stockholders and affiliates from the disastrous concession of their #1 market. This report is quoting nonsense.

Use scarce capital to buy up other poker rooms? Exactly how would that work? Party already has more tangible assets and staff then they could possibly use to run their shrinking business.

The only thing of value they would acquire from the smaller room is customers. But most of those customers are either Americans or already have a Party account. Most of the rest have heard of Party and would have an account if they wanted one.

As for Party and 888 being acquired by Americans? That's not going to happen at any price the stockholders want to hear about. Both companies need to demonstrate that they are even viable businesses in the new environment. Look at what is happening to Party:

1. More than half of their revenues gone overnight. No doubt the drop in profits and ability to service debt will be much larger.

2. Game selection will be greatly reduced and games will likely be tougher. This was perhaps their #1 competitive advantage and now it is going away.

3. Loss of much of their affiliate network. Many fishnet sites with American focus but worldwide readership are going to dump them. Their precious non-U.S. customers are going to be steered elsewhere when they go to the web for advice.

4. Smaller customer base to spread the cost of marketing and system improvements over.

5. Loss of buzz. They are going to merit a lot less publicity and attention in the future. No longer will they be synonymous with online poker in the public eye.

6. Competitors energized by new revenues from refugee customers. This money will become increased engineering and marketing expenditures.

Party and 888 have become fat and corporate. Moving from Antigua to London may not have been such a hot idea. Many of the second tier players are much tougher and hungrier and so are the nations that host them. In order to win they'll do the things Party is no longer willing to do.

Party could become irrelevant very quickly. I've always said that the main reason Party is big and successful is because they are big and successful. Once they start to lose their position it could all collapse very quickly.