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888’s Second Quarter Earnings Report: Online Casino and Bingo up; Poker Down

5 September 2010 by Devon Chappell

Man Alive! What’s to be done about the online poker slump? You mean you didn’t hear? Okay, well maybe the players aren’t in a slump, per say. However, the leading U.S. facing online poker rooms (at least the one’s who used to do business in the States) are beginning to see just how bad the online poker industry depends on Uncle Sam.

Granted, I’m not referring to the poker rooms still doing business with American citizens. For them, it’s business as usual. In other words, lots of money to be had. Poker Stars and Doyle’s Room, for instance, are experiencing gains in poker activity, while rooms like 888 Pokrt are being hit with all-time record losses.

Just how bad is the damage? Well, according to 888’s Chief Executive, Gigi Levy (don’t you love that name?), who announced company earnings last month, pre-tax profit is down 43%, which equates to a difference of $6.3 million from last year’s profit of $14.9 million. Let me put it another way – 888 earned more revenue from online bingo than poker.

Uh ya, so apparently 888 is going to be undertaking some cost cutting programs in order to prevent further losses ($6 million overhead reduction), although Levy didn’t say exactly how that will be obtained. Granted, much of 888’s loss in online poker revenue can be attributed to a slumping global economy and the World Cup, which is what William Hill’s CEO blamed for his company’s losses as well! 888 has been closed to the U.S. for some time now, which goes to show that market shifts do indeed take place as a result of factors other than government infringement.

However, one can only surmise just how much this loss would have been offset if 888 was still tapping into the lucrative U.S. online poker industry. Just how lucrative you ask? Well, let’s save that for another blog post. The latest issue of iGaming Bussiness magazine has some very interesting things to say about online poker in the State of California alone – and I definitely have some things I want to share regarding this in another post. In other words, stay tuned.

As far as talks about 888 going into a merger this year, Levy reiterated his earlier comments in the year that consolidation looked “highly likely”, and after being pressed for hints, did not rule out the option of merging with Ladbrokes. Following the merger between giant’s, Bwin and Party Gaming, 888 certainly needs to do something in order to stay in the games. Thus far, things are looking better – online poker revenue for August jumped 15%, in line with normal levels. As for online casino revenue, it was up for the second quarter.

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