PartyGaming and Playtech Deal into Asia

Shares in PartyGaming rose sharply yesterday after the online gambling company struck a deal with online software provider Playtech which will result in the two firms combining to provide online gambling services in Asia.

Asia is widely regarded as an "untapped frontier" for online gambling, and the deal struck between the two firms ensures that PartyGaming will be at the forefront of the charge into the Asian market. Playtech will now power the gambling websites that PartyGaming acquired through its purchase last week of Empire Online and InterContinental Online.

PartyGaming paid around $72 million for Empire and InterContinental, a deal which included a number of well-known and respected online poker and casino brands.

Under the agreement with Playtech, PartyGaming will now have access to Playtech's online casino, poker and bingo products. Playtech's products are widely regarded to be the best software platforms in the industry, especially their online casino software platform. The financial terms of the agreement were not disclosed, however the deal was beneficial for both parties – PartyGaming shares rose 12% to 35.5p yesterday, and Playtech shares increased 6% to 256p.

PartyGaming, the parent company of Party Casino and Party Poker, is recovering strongly after a decision to withdraw from the US market following the UIGEA. There were rumors circulating last week that PartyGaming had plans to re-enter the US market, but a PartyGaming spokesman hosed the issue down late in the week by stating PartyGaming had no plans to break back into the lucrative US market, which accounted for almost 75% of their customer base pre-UIGEA.

The cash-rich PartyGaming has instead been leading the consolidation charge, picking up a number of struggling companies. A trading statement released late last year showed they had recovered from the initial shock following the UIGEA, with high numbers of new signups in Europe. They also recently signed a multi-year deal with the World Poker Tour and, with the Playtech deal showing their intent to forge new paths in Asia, PartyGaming are proving they are determined to retake their spot at the top of the online gambling industry.

Playtech signed a landmark five-year agreement with China's leading gaming group Sino Strategic International last month to provide software for the Chinese market. Gambling games Playtech will write the software for include popular Asian games Mah-Jong, Do Di Zhu and Choi Da Di.

Online business news website The Independent reported Playtech chief executive as saying: "Asia is the big story for Playtech right now. This is the most lucrative and fastest growing market and everyone wants to tap into it. This agreement with PartyGaming is a real endorsement from the leading gaming company and we are delighted to have established this important relationship."

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