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UPDATE 1-Bwin.party cuts costs in Europe, eyes U.S. openings
May 21, 2013 / 8:01 AM / in 4 years

UPDATE 1-Bwin.party cuts costs in Europe, eyes U.S. openings

* Bwin.party to focus on fewer European markets

* Online gambling company looks to U.S. liberalisation

* Shares fall as revenues slide in first quarter

By Keith Weir

LONDON, May 21 (Reuters) - Bwin.party has targeted cost savings of 70 million euros ($90 million) this year as it joins other online gambling companies pulling back from markets where regulations are not clear cut.

Bwin.party, which offers sports betting, casino games, poker and bingo to online customers, has opted to focus on a core of around 10 European markets, rather than chasing business in more than 30 countries.

The strategy, set out in March, is similar to one being followed by betting exchange operator Betfair and sacrifices short-term revenues to try to produce a more stable business model.

However, bwin.party shares fell more than 5 percent in early trade in London on Tuesday, with some analysts concerned at the pace of decline in revenues which fell 17 percent to 180.2 million euros ($232 million) in the three months ended March.

Revenues were also hit by lower than expected activity in poker and casino games after moving users to a new platform at the end of last year.

CEO Norbert Teufelberger said revenues were unlikely to start improving until the second half of the year, but was confident the group would hit targets outlined in March.

“We guided the market that we expected revenues will decline this year by up to 10 percent versus 2012,” he told reporters.

“Despite the first quarter revenue performance, we remain comfortable with our guidance,” he added.

U.S. STATES OPEN UP

Bwin.party and other gambling groups are also looking to expand in the United States where Nevada and New Jersey have led the way in lifting some of the curbs on operators.

Teufelberger said bwin.party was preparing to apply for a licence in New Jersey and the company said it was well placed to take a market leading position as and when other states liberalise their markets.

Bwin.party is also pressing for greater regulatory clarity in Germany, its largest market, where a number of states are trying to restrict the number of licences available and allow operators to offer only sports betting.

Analyst Ivor Jones of Numis Securities said it was still “early days” for the strategy set out only two months ago, but saw benefits starting to flow later this year.

“What will remain is a business focused on improving services to, and retention of, existing customers and expansion into new markets, of which the U.S. is by far the most important,” he said.

“We expect to see some preliminary evidence of success in the third quarter of 2013.”

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