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Thurs. Aug 20, 2015
The online gambling industry is coming close to entering its official 20th year of existence. In the past two decades, a number of top companies have emerged that have really dominated the landscape of this industry. This includes a mix of older companies who got their start in online gambling in the late 1990s as well as companies that have come up a bit later on the scene. Whether they're a part of the new breed like Canada's own Amaya Gaming Group, or if they're a part of the old guard, all of the largest top ten businesses in this industry have been through a lot of interesting events.
Since 1997, it has been known for focusing and producing high-class, high-profile online gambling sites. 888 Holdings has a focus on quality over quantity even though they cover every major type of Internet gambling company including bingo, poker, casino, sports and casual gaming. While they are number ten on this list, their overall worth is pretty big considering how relatively few sites they operate compared to some of the other holdings groups on this list.
The big news for 888 Holdings has been a potential buyout in early 2015 by William Hill that completely fell through. William Hill was wanting to buy at a little over £2 per share while 888 held tightly to their own £3 per share evaluation. Neither side would budge through negotiations for several weeks (if not months), and that was the end of the deal.
Bwin.party is the result of a major 2011 merge between PartyGaming and Bwin Interactive. PartyGaming started in 1997, and they dominated the online poker world in the number one spot before the passing of the UIGEA in 2006 which forced them to pull out of the United States in order to stay on the London Stock Exchange. They're currently operate the number three online poker room in the world behind Amaya's PokerStars and Full Tilt Poker. They also have an overwhelming sports betting product in continental Europe with Bwin.
Back in 2012, co-CEO Norbert Teufelberger was held by authorities in Belgium. While Teufelberger was there to make a speech at the European Betting and Gaming Association's Responsible Gaming Day, he was brought in for questioning for a couple of hours. The questioning was about Bwin.party's services being offered in Belgium. This caused a major outrage among executives from a dozen different online gambling companies who collaborated on a letter that was published to the public condemning Belgium's actions in light of EU law.
More recently, in 2014 Bwin.party was on the receiving end of a ton of criticism because of huge bonuses that were given to top executives while the company was going through a period of negative growth. About 30 percent of shareholders were against the bonuses after the market cap of the company had dropped by almost two-fifths during their time in power. We haven't had enough time to see if they've earned these bonuses, but they could fall off of the top ten list if something doesn't turn around.
If you look at the history of the European online gambling industry, there have been a handful of top dogs in the software sector who have mostly dominated everything without allowing any newcomers to really challenge their position. What makes Net Entertainment so interesting is that even though they were founded in 1996, they made a push relatively late in the game, challenged the top software developers in the industry and won a lot of major victories.
The way they were able to do this is by focusing on a weakness in what was presumed to be the strength of the top developers. The major companies in this sector were hard to compete with because they had hundreds of games under their belt, and it was very hard to challenge. Net Entertainment completely flipped this on its head by producing games that were overwhelmingly better in terms of quality. Everything from the graphics of the games to the themes used were made of a higher quality, and this caused a paradigm shift in the online casino section of the industry. They even showed that they didn't care about the total number of titles they had available by actively pulling titles once they believed they were past their shelf date, something no other major provider has regularly done to date.
Since 1997, Unibet has offered online gambling products in just about every sector of the industry that you can imagine. They're based out of Malta and have boasted in the ballpark of 10 million customers worldwide. Unibet's efforts have gained them several major awards, especially for sports betting, and this includes the eGaming Review Sports Betting Operator of the Year for 2006, 2008 and 2009. To show just how flexible they are with their operations, they also picked up the Live Casino Operator of the Year award in 2009.
In 2007, Unibet CEO Petter Nylander found himself in the middle of a major legal hassle in France. He was arrested and held for hours under allegations that the operations of Unibet were violating French law. The exact laws cited were from as early as the 1830s, and the whole ordeal was seen as being ridiculous overall. Still, Nylander was very outspoken about what he saw as a clear publicity stunt, and Unibet has been at odds with a number of French officials ever since.
Betsson is the largest Swedish online gambling company who originally focused on B2B efforts before opening up in the B2C arena. This particular company was founded in 2000, but the company itself and the people backing it were working together since the 1960s. This means that they have a deceptively long history in the industry despite the Betsson name only being used since 2000.
The main thing that has given Betsson so much popularity is that they have aggressively sought out agreements to work with and purchase companies all over the globe. In 2011, for example, they not only bought out the Betsafe Group, but they also made a major deal with a government-owned company in China regarding gaming operations in the country which was one of the first of its kind. Their ability to seek out and make these deals is the number one thing that has earned them a spot on this top ten list as the biggest European online gambling site.
In the land of fixed-odds sports betting sites, Betfair (established in 2000) completely changed the game by putting in place a market where players could offer and accept each others wagers instead of having to deal with fixed-odds packages only. This has led to them being the largest betting exchange on the Internet.
Betfair came under a ton of fire in 2008 when they introduced extra charges for winning players. In the middle of 2011, they raised these extra fees to a particularly high level which caused nothing less than total outrage among sports betting fans. Essentially, the claims were that this created a situation where it was impossible to be a major, long-term winner at their exchange. They also faced criticism in 2010 when Harry Findlay, a high-end horseracer, was found to be using Betfair to bet against horses that he owned.
Generally seen as the biggest online gambling software provider by volume, Playtech's main characteristic that sets them apart is that they're well-known for their online casino game selection even though they tend to focus on other areas like bingo, sports betting and poker. Teddi Sagi formed the company in 1999, and after hitting the London Stock Exchange in early 2006 at a value of about £550 million, the passage of the UIGEA in the United States gave it an almost immediate drop of about 40 percent later that same year. In spite of this, they have continued to dominate the industry ever since.
While Playtech is a powerful company with a good history of taking care of their players, they've also had their own controversies. Founder Teddy Sagi was convicted of insider trading (among other things) early in his career and spent nine months behind bars. Playtech's game Lakshmi Gold (a 25-payline video slot) has also come under fire for depicting Hindu deities. Many Hindu figures have come forward demanding that the game be removed, but it has not so far.
The Amaya Gaming Group is the largest Canadian online gambling company, and it's only surpassed in size by two of the biggest gambling brands in history. Unlike many companies on this list, they are an investment group which has purchased a number of major assets thought to be undervalued. So far, they've been proven right over and over again under the leadership of CEO David Baazov who has taken the company from small beginnings to its current status as one of the primary juggernauts in the online gambling world.
Two major actions have really defined Amaya in its current state. The first was its 2012 purchase of CryptoLogic. CryptoLogic was once the largest online casino software provider in the world, but they ran into a lot of financial problems and lost their position because of poor leadership. Baazov targeted this company and purchased it to shore up their own online casino holdings. They were immediately in the green after restructuring, and they have remained profitable since.
What really makes Amaya a big deal right now is that they are the center of the online poker world after purchasing PokerStars and Full Tilt Poker in 2014. Several billion dollars had to be raised for the purchase, and it helped to make Canada the biggest country in the world for online poker. The deal was so big that they are being investigated for their position on the Toronto Stock Exchange, but no charges have been filed as of the time of this writing.
Known as the largest gambling company in Ireland, Paddy Power has made an exceptional name for themselves. Aside from providing excellent services, they've mostly done this through outrageous marketing campaigns that have gotten them into hot water more than once. The company itself was founded in 1988 when three bookmakers combined their shops under one name. They were then particularly aggressive about expanding to more betting shops in the late 1980s and early 1990s which gave them a foothold on the industry that they were able to parlay into a foothold on the online gambling world.
Paddy Power has frequently been seen as the king of controversy. For example, when Barack Obama was elected as the President of the United States in late 2008, they offered a bet at 16:1 odds that he wouldn't finish his initial four-year term. Many people took this to believe they were offering a bet on Obama's assassination. They also offered odds on the first species to be made extinct as a result of the Deepwater Horizon oil spill in 2010 in the Gulf of Mexico. Did you hear about the most controversial ad campaign in the UK last year involving Oscar Pistorius? ...guess who??
A special mention should be given to a special record they hold in the United Kingdom as a result of their antics. In early 2014, a record-breaking 5,525 complaints were made to the ASA (Advertising Standards Authority) because of an advertisement that Paddy Power ran. The advert was offering a promotion for its odds on the Oscar Pistorius trial verdict that read, "Money back if he walks." Every single complaint to the ASA over the advert was marked as being upheld.
The oldest company on this list is William Hill. They've been around since 1934, and the company is named after the founder William Hill who first started accepting bets thanks to a loophole he was able to exploit in the ban on gambling that existed in Britain at the time. What really sets this company apart is that they have been able to use decades of experience in the land-based gambling industry to define how they operate their online holdings. This experience edge has allowed them to dominate most of Europe in the realm of online betting.
Being on top is not without controversy. A number of accounting irregularities were found in the late 1990s, and this caused them to be held under investigation by the Serious Fraud Office of Britain. This happened primarily during the sale of the company from Grand Metropolitan to Brent Walker, and it was mostly a matter of Grand Metropolitan lying about the profit levels to run up the price that Brent Walker was willing to pay. William Hill has also been accused of having members of parliament on the payroll, and they benefited a fair amount from new UK gambling tax structures that went into place in 2014 that forced out a lot of the smaller competition.
If you look through these biggest ten companies, you'll notice that they all have something major that sets them apart. Whether it's the overwhelming experience of William Hill, the big picture thinking of the Amaya Gaming Group or Net Entertainment's ambition to challenge the top names of the industry, none of them are 'run of the mill' businesses. This just goes to show that to be on top and maintain that position for years to come, they're going to have to continue to innovate and give their customers more of what they want.
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