• The Best and Worst of 2005

by Mark Balestra January 16, 2006 - For those of you who can't get enough when it comes to doling out awards to I-gaming businesses for an assortment of accomplishments ranging from monumental to marginally significant, I'm sorry to say I have nothing to offer. What I do have, however, is this brief list of Best Of/Worst Of Recipients, which is not the slightest bit scientific, organized or even well thought up. They are not honors, and the process (or lack thereof) for coming up with them is not even remotely fair. Region/Jurisdiction on the Rise: Tasmania The conventional wisdom is that United Kingdom is the future center of the I-gaming universe, but I'm not so sure about that. (See "Region/Jurisdiction on the Decline" below.) While no jurisdiction is showing itself worthy of "center of the universe" status, I'm very intrigued by Tasmania's move to license betting exchanges. Australia's smaller states are at a considerable disadvantage under current policy and that's why Tasmania went for it. It was a bold move that ruffled a lot of feathers, but considering PBL's brand and Betfair's dominant position in the betting exchange market, there's a potential for Tasmania to make a lot of money off licensed exchange betting. 2004 Winner: North America 2003 Winner: The Caribbean 2001 Winner: Europe Region/Jurisdiction on the Decline: United Kingdom Seriously. Here's the deal: While England's new gambling policy provides the biggest opportunity yet for mainstream gambling and entertainment companies looking to be regulated in a First World jurisdiction, bureaucracy, red tape, arrogance, ignorance and all the other givens will get in the way. I don't fully understand the intricacies and politics behind devising a tax scheme, but the Treasury doesn't appear to be in a position to offer low enough rates to attract I-gaming operators. I believe they will eventually come around, but stubbornness will prevail in the short term. 2004 Winner: Antigua 2003 Winner: The Isle of Man 2001 Winner: The Caribbean Best Marketing: Paddy Power If you subscribe to the theory that controversy is good publicity, or that there's no such thing as bad publicity, you can't argue with Paddy Power's "Last Supper" campaign. The Irish bookmaker's billboard advertisement depicting Christ and the apostles gambling at the Last Supper summoned the wrath of religious groups and resulted in a barrage of complaints to the Advertising Standards Authority. The result was lots of headlines and plenty of bang for the marketing buck. We also liked Golden Palace's Jesus pierogi, but GP (for once) has to take a back seat in this case. 2004 Winner: Golden Palace 2003 Winner: Golden Palace 2001 Winner: Golden Palace Worst Marketing: B-List Celebrity Endorsements Remember the good old days when Kenny Rogers and Larry Holmes were plugging online gambling sites? For whatever reason, the celebrity endorsement trend took off like never before in 2005. The celebrity route is generally effective, but the lineup of b-listers that's been rolled out is pathetic. I won't mention names. You know who you are. 2004 Winner: Paradise Poker 2003 Winner: Ladbrokes 2001 Winner: Bentley Communications Worst Policy: United Kingdom I strongly believe that the process of liberalizing England's gambling laws will be much more painful than anyone imagined. Supporters of the new policies have pushed forward (albeit with many concessions) almost as if they did not anticipate the inevitable backlash created by the expansion of gambling. There hasn't been much debate regarding the I-gaming regulations, but just wait until the tax policy is finalized. For the moment, it appears that the Treasury didn't learn its lesson when it drove Internet wagering operations offshore by overtaxing them. 2004 Winner: The European Union 2003 Winner: Greece 2001 Winner: U.S. Congress Most Resilient: Betfair Betfair is the I-gaming industry's version of Teflon. Throw whatever you've got at them, and it will roll right off. Anyone who wants to take a crack at knocking this company down had better get in line. Despite countless efforts in Australia to quash their campaign to get a license in Tasmania, they stayed the course and got it done. Say what you want about them, but there's no denying there resilience. 2004 Winner Betfair 2003 Winner: Youbet 2001: Winner: World Gaming/Starnet Best Acquisition: OnGame There are so many to choose from, but I like betandwin.com's purchase of OnGame. The two European companies have a lot in common. They're both young and aggressive and both seem to be on their way to becoming major forces in the I-gaming space. OnGame, the Sweden-based poker network provider, has threatened for the last two years to climb to the stature of PartyGaming, PokerStars and Paradise, and Austria-based betandwin is the type of company that can take it to the next level. betandwin, meanwhile, has established itself as a leader in the European sports betting markets and could strengthen its position by entering the poker business. The new company is very well positioned to dominate in the European poker market, but will it seek U.S. dominance as well? If so, I hear PokerStars is up for grabs. 2004 Winner: Paradise Poker 2003 Winner: Centrebet 2001 Winner: GoCorp Biggest Splash: EmpireOnline Much of what's happening on the M&A front in the I-gaming space is a result of Empire forcing PartyGaming's hand. By building itself into what amounts to the world's most successful I-poker affiliate, the partner that got too big undoubtedly took a fair share of business from Party, and in all likelihood played a significant role in slowing Party's growth--a trend that led to panic on the LSE and ultimately erased millions of dollars in market cap for most of Party's competitors (including Empire). The unwanted competition ultimately led to Party restructuring its licensing model, which ultimately led to more industry consolidation. Further, by presenting itself as an acquisition candidate, Empire added some urgency to the race for I-poker market share. 2004 Winner: Poker 2003 Winner: Poker 2001 Winner: Playboy Best Neighbor: Albania No jurisdiction qualified for this category in 2005, so I went for the first country I could think of alphabetically that has no position on Interactive gambling. They should be proud. 2004 Winner: Canadian Lotteries 2003 Winner: Pacific Racing Jurisdictions 2001 Winner: N/A Worst Neighbor: Victoria, Australia Australia's large states have done their best over the course of the last two years to bully Tasmania into dropping its movement toward licensing betting exchanges, and none of them bullied louder in 2005 than its neighbor across the Bass Strait. 2004 Winner: The United States 2003 Winner: Australia 2001 Winner: N/A Company of the Year: PartyGaming This was the easiest category to pick. There are a lot of great candidates, but how can you argue with a $9 billion float and a spot on the FTSE 100? PartyGaming is I-gaming's biggest success story to date, and they dominated the headlines in 2005. 2004 Winner: IGlobalMedia/PartyGaming 2003: Winner: Betfair 2001: Winner: Access Gaming Systems

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