PRTY - It's consolidation time!

Playtech hopeful of Asian deals with PartyGaming

LONDON (Reuters) - Playtech (PTEC.L: Quote, Profile , Research) is hopeful a deal to power PartyGaming's (PRTY.L: Quote, Profile , Research) newly acquired gambling Web sites could lead to further deals to sell PartyGaming its Asian games, Chief Executive Avigur Zmora said on Tuesday.

After the United States effectively banned online gaming in November, both companies stated they would look to Asia to drive future growth, with Playtech launching online Mahjong and Pachinko there last month.

"If they have serious aspirations in Asia, I'm sure they will shop for product -- it's not a product you can develop in one day -- and I'm sure Playtech will be one of the leading options," Zmora told Reuters.

"The second you have a relationship, it's much easier to involve them with new products. Party is looking at similar areas geographically, with the focus in Asia, so it might lead to further business down the line."

Playtech said earlier on Tuesday it had struck a four-year deal with PartyGaming to power gaming Web sites that PartyGaming has agreed to buy from Empire Online (EOL.L: Quote, Profile , Research) and Intercontinental Online.

The Web sites that are being acquired by PartyGaming include NoblePoker.com, Clubdicecasino.com, EnterCasino.com, MissBingo.com, FairPoker.com and MagicBoxCasino.com.

Zmora said integrating the players of rival Tribeca, which Playtech agreed to buy in November, would probably be completed by the end of the first quarter of 2007. Continued...

The $75 million deal brought with it a number of Internet gambling websites operating on Tribeca's poker software platform, including VCPoker, PaddyPower Poker, Blue Square Poker and Scandinavian group, Expekt.

"There are very high margins because of the great synergies," said Zmora. "The vast majority of the expenses are going away -- the developers are already there, and it needs a little bit of customer support, a little bit of graphics."

"They're talking about something like $4 million a quarter, during August, September, October, then you can expect about 80-85 percent of that going to Playtech's bottom line."

Zmora said that Playtech would also benefit from significant cross-selling of online games to players using PartyGaming's new websites.
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"Cross-selling will be significant," he said, adding that generally, roughly 10 to 30 percent of players would typically cross between linked sites.

Zmora said there were further opportunities available for acquisitions in the online gaming sector.