Shuffle Master Acquires Ongame Network for €19.5 Million

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Call it a pregnancy, if you will. On Monday, the Nevada-based gaming supplier Shuffle Master formally announced plans to purchase the Ongame Network. The deal is expected to close “not more than nine months following execution of the definitive agreement,” according to a Shuffle Master press release. As it stands now, the Ongame Network is the fifth largest network worldwide, according to PokerScout, and does not accept U.S. players.

The deal is worth €19.5 million, which will be paid to bwin.party. There’s also a payment component that hinges on whether internet gaming is legalized in the United States: “[Shuffle Master]may pay up to €10 million in cash within five years of closing, contingent upon the commencement of legalized, real-money online poker in the U.S. within such period. The €10 million contingent payment decreases through the five-year period.”

Rumors of the acquisition have been rampant in recent weeks as Shuffle Master applied for a Nevada internet gambling license. However, on Monday, an official statement was made. PokerScout’s Dan Stewart told PocketFives in an exclusive interview, “This is the continued scramble of U.S.-based casinos and gaming suppliers to get a foot in the door for the future U.S. online gaming market.”

Gavin Isaacs, CEO of Shuffle Master, commented that the Ongame Network was a perfect fit for its business-to-business plans: “I am confident that Ongame will fit seamlessly into our ongoing interactive initiatives of delivering our renowned brands to online gaming operators, partner websites, social networks, and mobile platforms… This acquisition is further evidence of our great momentum as we continue to execute on our core businesses and pursue our strategic objectives for future growth.”

There have been a number of transactions executed and partnerships forged in the not-so-distant past as the industry sets itself up for the legalization of online poker in the United States. Caesars already has a relationship with 888, while bwin.party has one with MGM and Boyd. In mid-February, ChiliGaming entered into a union with the Golden Nuggetto run a free play site, and, just weeks prior, Ladbrokes purchased a majority stake in Stadium Technology Group, a Las Vegas firm, to expand into the U.S. market.

Despite no explicitly legal rake-based online poker sites operating in the United States, companies have been lining up and seeking companions.

“The writing is on the wall that the market will be here sooner rather than later,” Stewart observed. “The exact format of online poker in the United States is up in the air, like how many states will legalize it and whether there will be compacts. Nobody knows exactly what the market will be, but everyone knows it’s inevitable. The U.S. is potentially the most lucrative market to be in if a lot of the states legalize it, so it’s not too surprising that companies are scrambling right now.”

As we said at the top of this article, the Ongame Network is the fifth largest online poker entity worldwide and has a seven-day running average of 2,150 real money ring game players, according to PokerScout. It sits just ahead of PokerStars‘ Italian-facing room in PokerScout’s traffic rankings and also operates networks in France and Italy.

What will happen to Ongame’s traffic once Shuffle Master officially closes the transaction? A misdeal?

“My understanding is that bwin is not going with the new Ongame,” Stewart replied when asked that very question. “bwin is a significant chunk of Ongame’s liquidity. I’m not saying Ongame will collapse without it, but bwin does contribute a significant percentage of Ongame’s liquidity. The spun-off Ongame will likely drop in traffic, but it remains to be seen by how much.”

Peter Bertilsson, Managing Director of Ongame, was looking forward to the deal being finalized: “We believe that our experience and expertise in the European market is a natural fit with Shuffle Master’s considerable commitment and history in developing innovative games and products for land-based operators. I am confident that together our organizations are going to be able to develop the very best in new and innovative solutions for the iGaming market.”

If you’ve never heard of Shuffle Master before, the company produces automatic card shufflers, roulette chip sorters, proprietary table games, electronic table systems, and electronic gaming machines, among other products. It is based on Nevada and traded on the S&P Smallcap 600.