888.com Enters Into Deal With Harrah’s
Sept. 11 (Bloomberg) -- 888 Holdings Plc rose the most since May in London trading after signing a contract with a unit of Harrah's Entertainment Inc. to provide online services, paving the way for a possible re-entry into the U.S. market.
888, the U.K.'s second-largest online gambling company, climbed as much as 14 percent. The company's Dragonfish business-to-business unit will provide poker and casino services to Harrah's in "a multimillion dollar" deal, 888 Chief Executive Officer Gigi Levy said today in a telephone interview.
Harrah's, the world's biggest casino company, is lobbying Congress to allow licensed gambling operators to accept online wagers from people in the U.S. 888 is investing in business-to- business services to gain a quicker foothold in the U.S. if online betting is legalized there, Levy said.
"It's going to be the big U.S. players that take advantage of the situation," he said. "The easy entry for us, being that all these companies require infrastructure and services, is on the B2B side."
Companies were barred from operating Web-gaming services in the U.S. after Congress stopped credit-card companies from collecting payments to online gambling sites in October 2006.
888, along with other online gaming companies, pulled out of the U.S. then. Half the company's revenue came from U.S. clients, 888 said at the time.
The shares climbed as much as 11.7 pence to 97 pence and traded at 94.25 pence as of 10:27 a.m. in London. The stock has dropped 3.3 percent this year, giving the company a market value of 324 million pounds ($541.2 million).
U.K. Services
888 will offer support services in gaming and payment software for Harrah's World Series of Poker and Caesars Casino brands in the U.K., the company said in the statement.
"The real massive boost could be if Harrah's partner with 888 in the U.S.," said James Hollins, an analyst at Daniel Stewart & Co. in a telephone interview. Hollins today raised his target price to 125 pence from 101 pence.
Hollins said it was surprising that Harrah's chose to partner with a company that has so far declined to seek a settlement with the Department of Justice over its operations in the U.S.
PartyGaming Plc agreed in April to pay the U.S. government $105 million to settle claims against the company for providing Internet gaming.
"The environment is not very clear for the need or visibility of signing such a deal," Levy said, adding that attempts to introduce new legislation "had positive implications."
888 is also discussing additional business contracts with a "few other U.S. companies and not just in the field of casinos," Levy said. He also anticipates making an acquisition for the business unit "in the coming quarter."
