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December 27, 2006

Empire Online Exits Online Poker Business: What's Next?

posted by MR WAVETHEORY at 12/27/2006 11:36:00 PM
This year was a tough one for the online gambling industry. I wrote earlier about how the hammer came down on the industry when Congress passed a law to ban online gambling. Now, Empire Online (EOL.L), one of the biggest marketers in online gambling, has exited the online poker business. It just sold its online assets to PartyGaming PLC (PRTY.L) for $30-40 million.

Empire Online was basically in the business of finding customers for the big online gambling sits. It partnered with 888.com and whitelabeled 888.com's software and skinned its own sites. Think of it as the online version of the offline casino hosts who bring business to casinos.

That business of course got eviscerated when the Feds busted SportingBet and then passed the internet gambling ban.

Regardless of the setback, Empire Online's founder made a lot of dough. He took the company public just at the right time in the middle of 2005 and then the stock traded as high as 300 pence on the London Stock Exchange. Today, Empire Online is worth 44 pence - good for an 80% wipeout.

What is interesting is that the company's founder Noam Lanir built quite an incredible balance sheet for Empire Online. While poker was hot, it received a payment of 250 million pounds from PartyPoker. Add that to the 15 million pounds it will receive from PartyGaming for divesting its online assets and you have a balance sheet with close to 265 million pounds of cash. (Detail: The mid year results of Empire Poker show that it had 262 million pounds of cash, so it will have closer to 277 million pounds at year's end.) That is not bad for a company with a market value of 128 million pounds. Essentially, the stock is trading at a 50% discount to cash. Apparently, the founder, Noam Lanir, knows this real well and has decided to shift his company into the investment business.

All aboard! Empire Online is the ultimate Christmas holiday sale!

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Blogger Reza Abdillah said...

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3:01 PM  

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