Is The Gambling Industry Recovering From the Economic Crisis?

The consolidation of the online gambling industry has been anticipated for a lon-while now, and the move seems to have come a step closer after confirmation was made of earlier rumours regarding the merger of PartyGaming and its Austrian rival Bwin.

Geentanjalis Sharma, the leisure analyst at Noble has said: "Everyone's been talking to everyone within the industry and that's been an open secret” . She goes on further to say that a merger between the groups made good financial sense, creating a strong European online gambling group would mean Europe being able to compete with the more aggressive, larger, American rivals.

American companies are prominent in both the US market and the European market, and the situation is only set to worsen as the US considers a reversal on its online gambling ban, which was bought in by the Bush administration.  

In relation to Playtechs recent alliance with the American lottery group, run by Scientific Games, Ms Sharma suspects that further deals are in the offing, she said: "We're seeing the culmination of all these talks and I'd imagine we'll see a lot more deals while we have the stronger winter trading period holding up valuations," . Following its online venture with gambling giants William Hill, Playtech have published figures showing that it received a massive $7 million in profit in the last week (as of 27/01/10).

The weakness in the global economy during 2009 affected the online gambling industry significantly, but has been slowly stabilising since October 2009. "This winter has been extremely harsh, which forces punters indoors. Online gambling has been a beneficiary," Ms Sharma duly noted, and goes on to add that the market was improving faster than other sectors despite problems caused to the sporting calendar due to this months earlier bad weather, and that because the football tables are acting unpredictably this year, this has helped to further normalise the gambling industry.

However, Ms Sharma claims that Ladbrokes is not out of the water as yet, and could be left behind in the confusion that has fallen on the internet gambling industry during the economic crisis. She says:  "The problems at Ladbrokes are a lot more structural and there are things that have happened in the company that the chief executive's departure will not fix. They don't have the cash to do outright deals, and, as pure-play bricks and mortar specialists, would have the weaker hand at the online negotiating table."

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