Bwin on the Way Out of Online Gambling?

“In a market environment where uniform regulation does not yet exist, organizational adaptation continues.”

Online gambling stalwart Bwin.party is moving into serious talks to sell a portion if not all of its online gambling enterprise.

Not a Harbinger

The seemingly surprising announcement is not as shocking as it might seem on the surface.

Despite Bwin's being a successful company and industry leader, it is not profitable or viable for a company to continue to have to struggle to adapt to or overcome oppositional legislation from its primary markets. Unfortunately, that is what Bwin is experiencing with the slowing of regulated online poker markets in Europe, where Bwin operates.

The Bwin model seemed prime to capitalize on a new wave of opportunity that online gambling represented not more than a few years ago. Created as a merger of sports betting group Bwin and online poker group PartyGaming in 2011, the company acknowledged as of November that it was considering a range of proposals to divest.

Bwin Options Being Fleshed Out

Canada's Amaya Gaming is one rumored suitor. This would make prefect sense, because of Amaya's recent aggressive buying spree, which last year included acquisitions of online gambling site giants PokerStars and Full Tilt Poker.

Bwin chairman Philip Yea would not name names, except to say there were secondary discussions taking place with a number of firms.

Sign of Market Failure?

Any business model relies on an integrated market system. Due to sovereignty of governments, market stability for online gambling in the EU remains unstable and unpredictable, subject to volume fluctuations fixed to results of the regulation process in each member country.

The fact is, online gambling providers are going to need the backing to wait out the regulation process globally while countries in each sector of the world work out the kinks in their online regulation process.

Solutions

Consideration of a model that does not rely on projected expansion but focuses on tangible markets in the countries where online gambling is already regulated could temper unrealistic or overly ambitious projections, potentially protecting against overinvestment to lower operating costs for online providers.