Citing the slowing European economy, Las Vegas-based casino supplier Shuffle Master Inc. today said it canceled its deal to buy Internet poker company Ongame Network Ltd. for about $26 million.
The deal disclosed in March for the company, which is based in Gibraltar, was seen as a way for Shuffle Master to quickly and decisively expand into the online gambling sector.
Ongame has an Internet poker engine that operates as a wholesaler, selling its services to consumer Internet gaming sites. Shuffle Master is best known for selling equipment like card shufflers to casinos worldwide.
Ongame is a subsidiary of bwin.party Services (Austria), which has its own Internet gaming deals with brick-and-mortar casino companies MGM Resorts International and Boyd Gaming Corp.
“When we signed the definitive (purchase) agreement in February, we believed that general market conditions and Ongame’s sales pipeline supported the purchase being neutral or modestly accretive to the company’s EBITDA (earnings before interest, taxes, depreciation and amortization). Business conditions in Europe have deteriorated since February and as a result, it has become evident to us that Ongame’s operations post-acquisition will not achieve the near-term results we initially expected and will require a larger ongoing investment than anticipated. Although we believe in its eventuality, there is also uncertainty surrounding the timing of legalization and the rollout of online poker in the U.S. at both the state and federal levels,” Shuffle Master CEO Gavin Isaacs said in a statement today.
Shufffle Master Chief Strategy Officer Louis Castle said the company is investing in its own gaming content platforms and “is considering other options for providing a business-to-business online poker product consistent with our other online offerings for web, social media and mobile applications.”
In its own statement today, bwin.party said: “The sale of surplus assets, including Ongame, remains a core part of bwin.party’s strategy. bwin.party is re-engaging with other third parties that have expressed an interest in acquiring Ongame. bwin.party will make a further announcement as and when appropriate.”
Shuffle Master stock was off nearly 5 percent this morning, trading down 63 cents at $12.71.
Shuffle Master didn’t immediately say if or how today’s announcement would affect a deal announced June 12 in which it, fellow casino suppliers Bally Technologies Inc. and Aristocrat Technolgies Inc., and Ongame Network entered into a strategic alliance to expand their online gaming presence and increase their online business-to-business Internet gaming product offerings.
In a separate Internet announcement this morning, Las Vegas-based Bally announced that its first “iGaming” platform is now live and running a free-play poker website in partnership with the Golden Nugget casinos in Las Vegas and Atlantic City.
This is one of many initiatives in the industry in which free-play sites are expected to convert to real gambling sites once pay poker is operational in Nevada and other states.
“This is a very monumental time for the Golden Nugget as we launch a play-for-free site and introduce our loyal patrons to a new way to enjoy gaming entertainment when they can’t be on property,” Golden Nugget owner and Chairman Tilman Fertitta said in a statement. “We believe that online gaming is inevitable in the United States, and that our free-play site will enable the Golden Nugget to be well positioned to compete when U.S. laws allow for online gaming.”