Issue 270
November 14 - November 20, 2005
Volume 5
page 2

Empire under pressure as PartyGaming buys partners
As reported by The Guardian

UNITED KINGDOM - PartyGaming Friday put the penultimate touch to the overhaul of its relationships with so-called "skin" operators, buying two of its partners and severing its links with a third.

The deals were seen as a further alarming development for Empire Online, the fourth and largest skin operator. PartyGaming made a bid approach for Empire a week ago, but the potential target's share price has fallen 20% since then, reducing the company's market value to £260m. Analysts calculate that Empire's negotiating power in the talks is being eroded by the break-up of PartyGaming's skin network.

Skin operators work by recruiting online gamblers and directing them to the websites of actual operators, such as PartyGaming, owner of Party Poker, the world's biggest poker site. In exchange, the skins collect a slice of the profits generated by the online players.

However, PartyGaming undermined the economics of skin operators' businesses in September by switching its own directly recruited players to a superior operating platform. The skin players were left to play among themselves on an inferior version of the Party Poker site. Many are thought simply to have re-registered directly with Party Poker's new platform, thereby removing the commissions they were generating for the skins.

PartyGaming is buying MultiPoker, which has 255,000 registered players, mainly in Scandinavia, for $14.5m (£8.3m) in cash. It will also pay about $4m for another privately owned skin, Intertops Poker, though its owners may continue to recruit players for Party Poker by working as commission-based affiliates.

Coral Eurobet, which is owned by casino group Gala, has decided to end its relationship with PartyGaming. It was Party Poker's second largest skin operator and clearly feels there is no future in trying to work within the new structure.

Yesterday's move leaves only the relationship with Empire Online, the largest skin contributor to Party Poker, to be resolved.

Robin Chhabra, of Evolution Securities, argued that yesterday's deals only strengthened PartyGaming's hand in the takeover negotiations.

"PartyGaming is using this to further squeeze down the price it pays for Empire - that's if it bothers at all," he said. "They're just deciding now if they're going to squeeze it and then buy it, or just kill it."

PartyGaming said its analysis of Empire's business would be thorough. "We are dotting all the i's and crossing all the t's and we will look under the floorboards to see if there is any dry rot there," its spokesman said.




"The new regulatory framework seeks to open the market in Chile"

As reported by

ARGENTINA - Francisco Javier Leiva, Chile Casinos Superintendent, was the speaker of the conference, "Chile: Casino tender process", in the second day of the series of conferences ey!05 "Encuentro Yogonet", held in Centro Costa Salguero within SAGSE Buenos Aires 2005 on November 9-10.

Francisco Leiva talked about the new regulatory framework and the current tender process, in which 17 new casinos are to be licensed in Chile. He also gave details about Law number 19995, which regulates the process as well as the stages and steps for the future.

"The new regulatory framework seeks to open the market," he said and added that the role of the state is to oversee the industry. He then stated, "The project that will increase the number of casinos seeks to improve and increase the regional infrastructure in order to improve tourism."

According to the law, some of the conditions to grant casinos in Chile are the following: a maximum of 24 casinos will be granted in total, from which there will be a maximum of 3 casinos per region, with at least 70 kilometres one from the others. Regarding riverboat casinos, he pointed out that they are allowed by law, as long as they have room for at least 120 passengers and navigate national waters for three days minimum.

Leiva assured that, in addition to casinos, there may be other investments to promote the development of each region and the tourism infrastructure. Chile is organized in 12 regions (the metropolitan region excluded), and 48 projects have been presented.

When talking about future changes in taxes, the superintendent affirmed that, besides paying income tax, there is also a special tax of a 20% gross income for games, managed by the local council and the regional government where each casino will be located. "The superintendence coordinates and controls the projects, their social impact, their impact in the environment and so on," he explained.

In the end of the evaluation, the entity has to make a presentation of the projects evaluated, that must reach at least 1200 points to be selected, considering a group of factors. "The presentation should be made by regions. For each region, we recommend the amount of places," he concluded.

Casinos talking to port
As reported by The Sun Herald

GULFPORT, Mississippi - Harrah's Entertainment and Copa Casino began exploring options Thursday for returning to the State Port at Gulfport.

Port commissioners directed the agency's lawyers and staff to begin drafting lease amendments for the two casino companies. Before Hurricane Katrina, the two casinos generated about $9.6 million in annual revenue for the port.

The Copa has asked for land to build a casino as well as a hotel on port property, said Don Allee, the port's executive director. Port commissioners reached a tentative agreement with the casino.

The Copa will exchange its current lease hold for 12 acres at the north section of the port, said Rick Quinn, the casino's chief executive officer. Chiquita, a banana importer, occupies the property now.

"We've got a layout that we think equalizes that much property for Chiquita," Allee said. "We've got to dig up some concrete that is part of an old slab and put a flat surface down at the southwest corner of the port."

Harrah's, the parent company of Grand Casino Gulfport, is looking to move its casino across U.S. 90 on property it owns, but will keep a presence at the port, he said.

"There may be a way to amend the lease and enter into an agreement whereby we could get revenue from a rebuilt Harrah's on the north side of 90 without giving up the revenue we would get," Allee said.

Harrah's accounted for the largest part, $7.6 million, of the money the port makes from the two casinos.

"We haven't seen any drawings or any indications of what they plan to come back with," Allee said. "It's all pending approval. What we may do is if they come back with a significantly larger investment, whether on our property or on the north side of 90, we will consider adjusting the percentage."

With a larger casino, the port could receive the same amount of money even if it lowers the percentage of gross gambling revenue it charges.

The port is using revenue from the casinos to fill in 84 acres on the Mississippi Sound to expand its pier and warehouse space. Copa's hotel will be a second phase project because space will not be available for the hotel until maritime operations are moved to newly created real estate, Quinn said.

"I think our mission all along has been to maintain that pleasant balance of gaming and maritime commerce," Allee said.

Jay Leno

Caesars Atlantic City: Tonight Show host, Jay Leno, will appear at the Caesars Circus Maximus Theater for 2 shows, Saturday November 26. With a star on Hollywood's Walk of Fame and a top-rated late-night television show, Leno’s “everyman” style and personality have helped him earn millions of fans worldwide.

Date: November 26, 2005

Time: 8 pm and 11 pm

Ticket Price: $75

For more information: 1-800-736-1420

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