The news that Party Gaming are buying online bingo site Foxy Bingo’s parent company, Cashcade is still causing a bit of a stir, though now it’s in the city. In fact today, a report on the Gambling Compliance website states that Evolution Securities financial analyst, Ivor Jones has now taken another look at projected three year forecasts for 888 Holdings in the wake of the news of the sale of Foxy Bingo and Cashcade in the Party Gaming deal. Jones has been quoted in the Gambling Compliance report as saying, he has been ‘taking a butcher’s knife’ to the previously prepared forecast figures in light of the decision by Party Gaming to buy Cashcade and their online bingo sites including, Foxy Bingo.
Damage to 888’s financial predictions if Cashcade jumps ship
The reason for the drastic review of 888 Holdings financial figures is to take into account anticipated losses in revenues should it be decided by the new owners of Cashcade, to rid themselves of the 888 B2B deal with Cashcade and to opt for Party Gaming software services instead. This of course would be the most obvious solution for the new owners and would see all the Cashcade owned sites such as Foxy Bingo, Cheeky Bingo and the new revamped Kiss My Bingo sites move away from 888 Holdings.
The projected damage to 888’s financial fortunes in the event of such a move should it happen in January 2010 would as predicted by Ivor Jones of Evolution Securities, take EBITDA down 13% from a previous forecast of $51.5m to $45m, although he is also quotes as saying that should Cashcade jump ship the effects on financial results for that year would be “unhelpful but not a disaster”.
888 Holdings however do not see an immediate problem with the announced deal with Party Gaming, and although a spokesperson for the company was quoted in the Gambling Compliance article as admitting that the news of the purchase by Party Gaming was not the best news ever, they also remarked that “the contract is locked in for three years and there is plenty in the pipeline, and so there is no short-term risk and prospects remain very good”.
Although the Times recently carried an article highlighting the huge financial risks that Party Gaming are taking in the purchase of the Cashcade’s online bingo and casino portfolio. The latest news for Party Gaming that Cashcade’s internet gambling sites such as Foxy Bingo and Cheeky Bingo now account for 23% of market share and is by far the online bingo market leader, is without doubt most likely to put a smile on the faces of the Party Gaming shareholders.