Party CEO predicts banks/ processors to leave US IG w/i 60 days

[olivert]

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I think the issue with Asia not being considered a big market is the legality of online gambling there, for instance it is illegal in China, Thailand, and I believe Japan. I also think there may be laws on the books in Australia about this as well.

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PartyGaming's CEO visited Beijing and Hong Kong two weeks ago.

Obviously, PartyGaming is considering a partnership with the Hong Kong Jockey Club (HKJC), which has a total state-sponsored monopoly on legalized gambling (Horse Racing, Lotto, betting on English Premier League soccer matches) in Hong Kong (though neighborhood Mahjong "schools" are everywhere).

Getting Mainland China to legalize online gaming, even within special economic zones such as Pudong (the east river bank of Shanghai), will be tricky.

[MiltonFriedman]

Give Mr. Garber a break. Apparently, he came on board at PartyGaming in April .... after leading Firepay. Before that he was apparently a lawyer ?

Of course he is the best person qualified to run the once-World's-Largest-PokerRoom .... right.

How do you make $740,000 per day in profits ..... Well, start out with $2.4 million per day and dance like crazy when your US market evaporates because you failed to throw enough wqeight around in DC in September, 5 months after you take command.

Market discipline is brutal but fair, Mitch. Your shareholders would not touch gaming unless it was publicly traded, the entrepeneurs at PokerStars desrve the market you failed to protect and then fled.

[olivert]

[ QUOTE ]
Give Mr. Garber a break. Apparently, he came on board at PartyGaming in April .... after leading Firepay. Before that he was apparently a lawyer ?

Of course he is the best person qualified to run the once-World's-Largest-PokerRoom .... right.

How do you make $740,000 per day in profits ..... Well, start out with $2.4 million per day and dance like crazy when your US market evaporates because you failed to throw enough wqeight around in DC in September, 5 months after you take command.

Market discipline is brutal but fair, Mitch. Your shareholders would not touch gaming unless it was publicly traded, the entrepeneurs at PokerStars desrve the market you failed to protect and then fled.

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How would you know that the likes of PokerStars, Bodog, Absolute, Full Tilt, etc. will still be able to do business in the U.S. once the regulations are implemented? (There is a reason why these sites are all scrambling to build up their European and Canadian player base in the next 6 months.)

Your view is entirely short-term (i.e. 6 months or less), while PartyGaming is taking the long-term (i.e. 3 to 5 years) approach by cleaning itself up so that it can pursue partnerships with the Chinese and Russian governments.

As I said before, the days of a gaming company getting a license in Antigua and being able to market around the world as "legal" is OVER. The U.S., France, Germany, and Ontario province of Canada are all cracking down to one degree or another, while governments in places such as China, Russia, Hong Kong, Taiwan, Japan, etc. will make all the rules regarding which gaming company will be explicitly licensed.

"Gaming" is NOT a "free market" business. Never has been. Never will be. The governments make all the rules.

Furthermore, being able to gamble has NEVER been a "right" anywhere in the world (including the U.S.), it has always been a "privilege", i.e. the government can decide who gets to gamble and on what a person can gamble.

PartyGaming has decided that there are much bigger fish to fry than the U.S. market.

[MiltonFriedman]

With Olivert the only issue is HOW the topic is somehow related to Statism, China and Online Gaming. This topic is NOT.

Olivert, I have NO doubt that Party's exit is looking at "the long term", but question whether the short term sacrifice would have been suffered AT ALL, had Mr. Garber et al paid better attention to their main market and worked a LOT harder to stop the legislation .... THAT is the point of MY post. Why give up about $800 million in revenue if you could stall a bill another year ?

Now, on to yours .... your sense of history is appallingly lacking, as is your knowledge of gamblings role in various societies.

You claim "Gaming" is NOT a "free market" business and that it "Never has been. Never will be." According to you, "the governments make all the rules."

Have you been under a rock for 8 years ? The online sector of gambling has been as close to a free market activity as I can recall. It was only the move of certain firms to self-entanglement with the public capital markets that has caused a hick-up. Those firms which avoided the public captal markets are still thriving. (As for what happens to PStars' levels if the regulations dry up US player funding doesn't make their profits in the interim any less real. 270 x $1.7 million adds up to a lot of business Party left behind.)


Gambling is and will always have a "free market" sector, regadless of government licensing or crackdowns. Free market has to be understod as inclusive of both "legal" and "illegal" activity. A free market is not defined by characteristics of legality or illegality. (Plenty of liquor flowed in the US during Prohibition, to take an obvious example.)

You equate "gambling" with "legal gambling". Sonny, gambling goes on whether it is legal or not. Do you think it doesn't go on in China TODAY, where it is illegal ? Korea ? The United States ?

As for Party's exit from the US market being focussed on development in China and Russia, you could NOT be more mistaken. It was a flight because Party, presumably, has a long term goal of RETURNING to the US. It has nothing to do with China or Russia.

Why does it have NOTHING to do with China or Russia ? Because neither China nor Russia would CARE whether Party had exited the US vis a vis someone like PStars. WHY would you think that either country would shut out a PStars due to US business, you really think they give a rat'sass about UIGE Act ?

(For the record, I happen to think that Asia IS the huge future market for poker, but that is apples and oranges relative ot a Party exit from the US.)

The ONLY benefit of Party exiting the US, after sleeping away $800 million of value on the legislative front, is that it will be able to come back.

Milton

[olivert]

[ QUOTE ]

Olivert, I have NO doubt that Party's exit is looking at "the long term", but question whether the short term sacrifice would have been suffered AT ALL, had Mr. Garber et al paid better attention to their main market and worked a LOT harder to stop the legislation .... THAT is the point of MY post. Why give up about $800 million in revenue if you could stall a bill another year ?

Now, on to yours .... your sense of history is appallingly lacking, as is your knowledge of gamblings role in various societies.

You claim "Gaming" is NOT a "free market" business and that it "Never has been. Never will be." According to you, "the governments make all the rules."

Have you been under a rock for 8 years ? The online sector of gambling has been as close to a free market activity as I can recall. It was only the move of certain firms to self-entanglement with the public capital markets that has caused a hick-up. Those firms which avoided the public captal markets are still thriving. (As for what happens to PStars' levels if the regulations dry up US player funding doesn't make their profits in the interim any less real. 270 x $1.7 million adds up to a lot of business Party left behind.)


Gambling is and will always have a "free market" sector, regadless of government licensing or crackdowns. Free market has to be understod as inclusive of both "legal" and "illegal" activity. A free market is not defined by characteristics of legality or illegality. (Plenty of liquor flowed in the US during Prohibition, to take an obvious example.)

You equate "gambling" with "legal gambling". Sonny, gambling goes on whether it is legal or not. Do you think it doesn't go on in China TODAY, where it is illegal ? Korea ? The United States ?

As for Party's exit from the US market being focussed on development in China and Russia, you could NOT be more mistaken. It was a flight because Party, presumably, has a long term goal of RETURNING to the US. It has nothing to do with China or Russia.

Why does it have NOTHING to do with China or Russia ? Because neither China nor Russia would CARE whether Party had exited the US vis a vis someone like PStars. WHY would you think that either country would shut out a PStars due to US business, you really think they give a rat'sass about UIGE Act ?

(For the record, I happen to think that Asia IS the huge future market for poker, but that is apples and oranges relative ot a Party exit from the US.)

The ONLY benefit of Party exiting the US, after sleeping away $800 million of value on the legislative front, is that it will be able to come back.


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You overlook one thing:

The likes of PokerStars and FullTilt didn't chose to stay private.

They remained private because they didn't get their IPOs out the door fast enough before the door closed.

They also know that they couldn't afford to shut themselves off from the U.S. market during the 270 days between the signing of the UIGEA and the implementation of the regulations.

Otherwise, both PokerStars and FullTilt would resemble ParadisePoker.com, which has turned into a virtual ghost town.

In case you haven't noticed:

1. Bodog has stopped advertising in the US and has evacuated its personnel from Costa Rica to Antigua, where the Antiguan government will NOT carry out extradition orders for online gaming executives. Even "Cole Turner" sees the writing on the wall.

2. Absolute has changed its deposit bonus promotions to favor non-us players, by pushing Visa and Mastercard (which can be used in places such as the UK and eventually Spain and Italy).

Even PokerStars is reducing its US marketing costs for the time being while it waits for the impact of the regulations. Even the new TV ads looked cheaper than the old ones.

You were congratulating the "genius" of PokerStars and FullTilt for staying private. You couldn't have been more wrong. Neither PokerStars nor FullTilt wanted to stay private by choice.

[StellarWind]

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PartyGaming also introduced a new acronym to the world in its release: EMEA. EMEA represents PartyGaming’s future as its most important market. The folks living in EMEA (Europe, Middle East, and Africa), represent about 80 percent of the recent total new player sign-ups, and 67 percent of its total gross daily revenue across all of PartyGaming products.

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I think there is a message in what is not here. From the beginning I suspected that the non-U.S. sites were going to experience trouble in the crucial Canadian market and Western hemisphere markets in general. It's hard to provide good game selection for these markets without U.S. players because of the timezone difference. Plus cultural ties between the U.S. and Canada are strong which creates many intangible advantages in Canada for the sites that cater to the U.S. The benefits also tend to compound as market gains lead to more gains thanks to word-of-mouth recruiting and a bolstered affiliate network within a country.

Canadians are wealthy and heavily represented in online poker. I suspect that they are second only to the U.S. as a current source of online gaming revenue. This is not a trivial problem for Party and it is even more serious for smaller sites that may offer very few games during North American prime time.

[Sniper]

Just to support your position on the importance of Canada... Distribution of origin location for 2+2 visitors...

[Nate tha\\\' Great]

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Just to support your position on the importance of Canada... Distribution of origin location for 2+2 visitors...



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Of course, 2+2 is an English-language website...

[MiltonFriedman]

I'll try and explain again ...

Party's fleeing the US as part of a "long term strategy to reenter the US at a later date" made perfect sense, sort of like the Titanic passengers climbing into the lifeboats as part of a "long term strategy to get back to England".

However the Party better course would have been to block the UIGE Act (for say $300 million), rather than hit the iceberg. For that, Mr. Garber's team deserves to be critiqued, especially when he tries to spin away from his abject failure to steer a safe course, losing at least $800 million in the process.

However, Oliver, I see we have totally switched topics again, since you have nothing more to say about China, Russia and Party's gaffe in not fighting the legislation tooth and nail.

Today's new topic is a spin to re-direct the thread to whether Pokerstars and FTP "wanted to stay private". (The answer is clearly no, as both had IPOs in the works. That is kind of irrelevant to anything I posted about the relative risk-adverse Party-come-lately public shareholders.)

As for the "marketing analysis" Oliver offers, that is a non-sequitor, indicate of nothing related to Party's wisdom or not in laying down for the UIGE Act passage or fleeing the market.

1. He ignores Absolute, which has been aggressively promoting its DotNet on television.

2. Fails to appreciate that throwing money at television commercials, rather than sponsored progamming, was already an area of diminishing returns.

3. WHERE does he think the increases at Absolute/UB, PStars and FTP came from .... seems the marketing, whehter private or public has had an effect.

Finally, Oliver is STILL not understanding the difference between a market (an economic concept) and regulation (a legal concept). He is really stuck conceptually on government regulation, citing Spain and Italy as the targets for an Absolute poker campaign favoring MC and VISA depositors. .... (FWIW, a campaign to promote Visa/MC does not ignore the US at all, Oliver. There is such a thing as uncoded transactions. It is more likely aimed at moving US players away from Neteller, a US-specific move.)

[frommagio]

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i'm honestly considering a large purchase of party stock, how could things realistically get worse for them?

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I prefer to own the stocks of corporations who have a growing base of happy and loyal customers.