Bwin and PartyGaming Create Huge Company

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Bwin and PartyGaming are already two of the biggest online gambling companies out there. However, the two recently agreed to a merger that could make the two companies the biggest online gambling entity on the planet.

The two sides were rumored to be discussing this merger last year, but both sides denied the talks. However, their merger, which is set to take place in 2011, only affirms that the two sides were indeed discussing a merger all along.

Pending the shareholders approval, both companies are expected to form a $3.7 billion company when the merger is complete. When the future merger was announced, PartyGaming was worth $1.8 billion while Bwin was worth $1.9 billion. Based on their net worth, the companies will take a nearly equal ownership of the company with Bwin getting a 51.4% stake and PartyGaming getting a 48.36% stake. In addition to the nearly identical stakes, PartyGaming CEO Jim Ryan and Bwin CEO Norbert Teufelberger will become co-CEO’s of the new company.

The timing of the merger is certainly interesting since it comes just after the passage of the Internet Gambling Regulation, Consumer Protection and Enforcement Act. This act is believed to be the first step towards the US government repealing its Unlawful Internet Gambling Enforcement Act (UIGEA), which was signed into effect by President George Bush in 2006.

It appears as if both companies are looking to cooperate in an effort to maximize their earnings when/if the UIGEA is officially repealed. Before the UIGEA, PartyGaming’s Party Poker was the world’s largest poker site with a reported 70% of their customers coming from the United States. After the UIGEA, the company fell to the 4th biggest online poker site; they are the 3rd largest site now. With Bwin’s help, Party Poker hopes to overtake PokerStars and Full Tilt Poker to become the biggest poker room once again.

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