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Home The Virgin Spreader The Virgin Spreader Partygaming joins the spread betting party
Partygaming joins the spread betting party PDF Print E-mail
Written by Virgin Spreader   
Friday, 15 January 2010 16:30
London Capital Group and Partygaming hook up: A new player in a clogged market.

Towards the end of last year I mentioned how clogged the spread betting market in the UK appeared to be getting based on what we were hearing from the big player's market updates.

News today is that Partygaming has signed a three-year deal with London Capital Group to offer a financial spread betting platform.

As mentioned on this blog on the 8th of December London Capital Group (LON:LCG) may have overcooked things in the white label department after issuing their third profit warning of 2009.

The profit warning came as London Capital, owner of Capital Spreads, suggested that their white label partners were part of the reason for their less than admirable performance.

“Although trading revenue has remained strong, the group has continued to experience lower volatility and lower interest income on deposits,” London Capital reported. “These, combined with higher expenditure on infrastructure and white label partnerships, have impacted the group’s profitability.”

The question now is if assisting another white label partner into the UK market was another bad move by London Capital Group?

I certainly don't think so. The benefits that large and established players like Partygaming offer are sure to offset any costs or present any major risk to the prime spread betting provider.

Indeed PartyGaming Plc (LON:PRTY) is reportedly the world’s leading listed online gaming company.

The Group is a constituent of the FTSE 250 share index with its shares listed on The London Stock Exchange under the ticker: PRTY.  In the year to 31 December 2008, PartyGaming’s Continuing operations generated revenues of $472.9m and Clean EBITDA of $144.2m.  

That said - the new enterprise is still likely to struggle in a saturated UK market.

IG Index, who remain the kings of spread betting in the UK, showed us through their latest results that growth is coming from external markets.

IG Index's 9th December update showed that UK business revenue was flat at £80m, Australian revenues were up 64 percent and mainline Europe up 65 percent.

Partygaming does have a global reach, and that should place them in a good position - as long as they recognise this.

Their best bet on the UK front is to convert as many of their existing punters into financial spread betting players.

Just as PaddyPower did with their impressive PaddyPowerTrader - another London Capital Group offering.