[toc]European internet gaming systems provider, GAN (formerly the Game Account Network) has announced that it is extending “an existing partnership with a major US casino operator to launch an International overseas real money Internet casino gaming website and mobile App.”
The casino expects to launch in the first half of 2017, targeting Europe and other regulated gaming markets outside the US.
Upfront money plus revenue share provides long-term revenue potential
The contract is for seven years, and GAN will receive an initial $1.4m cash payment “for intellectual property assets and development services following completion of customary due diligence and regulatory approvals – expected in Q4 2016.”
The partner casino will spend $10 million per year on marketing the new gaming site each year of the contract. GAN will also share in the new online casino’s revenues.
Some of the marketing will go on providing non-US resident players with access to the casino’s rewards program. This will be the first time that a real money internet casino has offered players access to a major US casino’s on-property rewards scheme.
Dermot Smurfit, CEO of GAN commented:
“GAN’s unique casino product is performing strongly in New Jersey’s regulated market and is anticipated to perform equally well in Europe’s fast-growing markets.
Enabled by the US casino operator’s brand, US casino property facilities, balance sheet and marketing investment, we anticipate our B2B turnkey services delivered to this US casino operator to contribute material revenue and earnings commencing H1 2017.”
Smurfitt also pointed out that GAN will receive “a substantial cash payment” for its last B2C intellectual property assets. This will complete GAN’s strategic shift to being a 100 percent B2B provider.
The Borgata is the most likely partner
GAN will announce further details of the deal, and the name of its partner casino on Sept. 30. A leisurely look through GAN’s client list suggests that the most likely candidate is the Borgata.
MGM struck a deal earlier this year to buy out Boyd Gaming’s fifty percent share of the Borgata.
By revenue, the Borgata is the New Jersey market leader.
As the sole owner, it is not unlikely that MGM will be looking to exploit the online gaming expertise it has gained in the New Jersey market.
When GVC bought bwin.party, there were rumors that GAN would replace the owners of partypoker as the supplier of the Borgata’s online gaming platform.
Borgata president Tom Balance said at the time:
“We also take great comfort in having GAN’s excellent real money Internet gaming product available to us as needed.”
It’s quite likely that the time for “as needed” has arrived.
The Golden Nugget could be an outside possibility
Tilman is a third cousin to Frank and Lorenzo, who made a brief attempt to gain a foothold in the internet poker market when they launched Ultimate Poker in Nevada’s regulated gaming market.
They won the honor of being the first state regulated online poker providers in the US, but after WSOP entered the market, Ultimate Poker failed to maintain a viable market share.
The Golden Nugget’s only serious internet gaming interest is its partnership with Betfair, but this has been enough for it to be number two in the New Jersey online casino market. August’s revenues were only slightly lower than those at the Borgata, coming in at $3.47 million.
The positive experience with Betfair may have encouraged the Golden Nugget to think about launching internet gambling for the European market. One argument against the possibility that the Golden Nugget is GAN’s partner is the experience of Ultimate Poker in Nevada.
If Tilman called his cousins Frank and Lorenzo to ask what they think of the internet gambling business, the replies might not form a ringing endorsement.
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