The recent announcement of the acquisition of Cashcade by PartyGaming has taken few within the industry by surprise. In fact, it’s been an open secret that the owners of Cashcade have been touting around the industry for a buyer since the beginning of the year. However, the acquisition which is for a reputed $100m, marks what many analysts see as the start of a period of consolidation within the online gaming sector. As such, the acquisition stands as a benchmark from which future deals are likely to be priced. This article looks at what you get for $100m and the main motives behind the deal.

Cascade is a private online gaming company which is registered in the UK and is based in London. It was formed in 2000, and is 80% owned by Management with the remaining 20% owned by the Independent News and Media Group. Cashcade’s primary brand is FoxyBingo.com which, according to wikipedia has a 13% share in the UK bingo market. The company have diversified into providing white label gaming solutions for third party corporate sites such as the Trinity Mirror and the Associated News and Media Group. PartyGaming are therefore acquiring a multi-faceted business.

The ultimate motive behind the acquisition appears to be to enhance PartyGaming’s share of the UK bingo market. The acquisition will mean that PartyGaming overnight control an additional 13% of the UK online bingo market. However, it’s also apparent that the acquisition will have an impact on the 888 Group, one of PartyGaming’s main competitors.

FoxyBingo.com is powered by software licensed and supplied by the 888 Group. It’s highly likely that this license will not be renewed, and this will have a considerable impact on the bingo revenue stream of the 888 Group. By acquiring Cashcade, PartyGaming are improving their market position by both increasing their market share whilst at the same time weakening one of their major competitors.Â

This looks to be good business, and with reported EBITDA of $14m for the last financial year, the acquisition price of $100m doesn’t look far off the mark.

About the author:

Dan Bernard is an ex-casino industry employee and now full time industry analyst. He runs the Online Pokies Club, a site dedicated to reviewing the best pokie games. More information on the acquisition of Cashcade by PartyGaming can be found in the Times business section.

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