International edition
September 29, 2020

After a poor 2010

888 aims for poker network top five

(UK).- Gigi Levy is aiming to push Pacific Poker into the top five dot.com networks for cash game traffic before the end of the year, the 888 CEO has told eGaming Review following poor annual 2010 results that included a 56% fall in profits before tax

We overtook Microgaming and the International network last year and our next target is Entraction. Becoming one of the top five poker networks is more than anyone expected,” he added, noting that overtaking Entraction would leave only iPoker, PartyPoker, Ongame and Cereus ahead of Pacific in the network category.

888’s revenues for 2010 were up US$ 15.4 million from US$ 246.7 million in 2009 to US$ 262.1 million, with a 21.2 % drop in B2B revenue explained by the movement of Wink Bingo to the B2C division, a change which saw bingo revenue for the year climb 368.2 % to US$ 50.1 million.

Profits before tax were down 56 % from US$ 34.6 million to US$ 15.1 million, due largely to poor poker performance in the first half of last year and high marketing costs that rose 35 % in a year from US$ 67.3 million to US$ 91.5 million, 38% of revenues, according to Aviad Kobrine, CFO at 888. Operating expenses, research and development costs, marketing, and administrative expenses rose 15 % from US$ 201m in 2009 to US$ 233. EBITDA was down 59 % from US$ 45.6 million to US$ 28.6.

Levy described the rescheduling of his company’s earn-out payments for Wink as “dramatically more comfortable than going to a debt fund,” highlighting the lack of penalties for early payment.

“It is a phenomenal business. It had only US$ 2 million EBITDA when we took it on and it now has US$ 10 million and will continue to grow in 2011 once we combine 888 Ladies, 888 Bingo and Wink,” Levy said on a conference call following the announcement.

“The deal is at the upper end of the earn out. The last 24 months has generated less costs than expected but created a cash problem which we have solved by agreeing to spread the payments.”

Thanks to the Wink deal its own share of the UK market for all products in revenue rose from 37 % (US$ 90.4 million) in 2009 to 49 % (US$ 128.2 million) in 2010, meanwhile its European market share shrank from 46 % (US$ 113.7 million) to 37 % (US$ 96.8 million).

After suffering in the first half of 2010, the launch of Poker 6 software, aimed solely at casual players, has seen an upturn in poker revenues, which have grown 86% since July. However, poker revenue for the whole of 2010 finished well down on the previous year’s figures, coming in at US$ 38.4 million (£ 23.95 million) compared to US$ 51.6 million in 2009.

Levy was also bullish about the impact of promotions such as poker cams and team poker, but insisted the full impact of the approval of the B2B deal with Caesars Interactive Entertainment would not be seen at this stage.

“It is not going to mean much in money terms, but Caesars is the most important gaming company in the world and I think it is a key relationship we would like to keep.”

 

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