Online gaming sites lining up to buy bwin

Online gambling companies are competing to purchase bwin.party digital entertainment.

The gaming website is one of the few acquisition opportunities in the industry, and the sector is "searching for scale as regulation tightens and development costs rise," reports the Financial Times.

On Monday morning, it was announced that Gibraltar-based 888 Holdings had confirmed interest in purchasing bwin – but now other companies are considering investing in the company. Canadian Amaya Gaming has teamed up with London-listed GVC Holdings in an attempt to outbid 888.

The Financial Times explains that there's so much interest in the company because of its proprietary betting platforms and scale.

"You have to spend big on marketing and you have to spend big on product to get good traction in the market, so operators are looking for as much scale as possible," analyst Gavin Kelleher said.

Declining revenues

In 2011, bwin.party was created after a merger between sportsbook operator bwin and online poker company PartyGaming.

Following a long period of declining revenues, the company put itself up for sale last year.

Analyst Nick Batram said that the company has "massively underachieved," ever since the merger. He warned that whoever ends up with the business faces some potential risks.

"The reason why bwin.party is where it is today is because it is effectively a failed [mergers and acquisitions] deal," he added.

Proprietary sportsbook

Mr Batram says that the most attractive part of bwin to potential buyers is the proprietary sportsbook. "Getting hold of that, which means you don't have to give millions away to third-party providers, has a lot of appeal," he explained.

In 2014, bwin's sports betting operations made €237.1 million (£170.24 million) in revenues – that accounted for 38 per cent of sales, and was primarily from regulated markets.

​Since 888 and bwin share operations in locations like Gibraltar and Israel, Mr Batram thinks a deal could provide benefits to both companies – enabling them to cut at least €50 million in overheads.

On Monday, bwin.party's shares rose 8.6 per cent to 108p. At the close of the London Stock Exchange on Tuesday, shares were sitting at 107.4p.