As Caesars Entertainment Operating Company (CEOC) is in the midst of voluntary bankruptcy proceedings, it is auctioning off one of the only two major assets that is not tied up in these proceedings, Caesars Interactive Entertainment (CIE). Currently, CIE ownership is split equally between CEOC and Caesars Acquisition Company (CAC), which is the other major part of Caesars that is not tied up in the bankruptcy proceedings.
Giant Interactive Group’s Acquisition Will Not Include WSOP.com
The Chinese online gaming company Giant Interactive Group (GIG) is in talks with Caesars to purchase CIE for roughly $4 billion. CIE encompasses all of the brand’s online gaming as well as the popular WSOP.com domain and brand, but, interestingly enough, GIG has explicitly stated that it has no desire to purchase WSOP.com. This means that if GIG does end up purchasing CIE, the WSOP brand will remain with Caesars until another buyer comes along.
Because GIG’s business is based solely on creation and distribution of online social games, the real-money poker aspect of WSOP simply does not fit in with their current business model. The social gaming side of CIE, however, fits ideally with GIG and has been growing by leaps and bounds over the past few years.
Leaving WSOP on the Table Could Make Way For Another Company to Step In
It is also relevant to point out that the WSOP.com earnings make up a very small percentage of CIE’s total revenues, so it doesn’t affect the GIG acquisition much to leave WSOP on the table. In order to generate some badly needed funds, though, it would be in the best interests of CEOC to try to find another buyer for the WSOP brand.
Unless GIG has a sudden change of heart, the most likely scenario for Caesars is that an outside company, like the Amaya Gaming Group, for example, will step in with an offer to purchase WSOP.com in order to push the already well-known brand into other legal gambling states along side Nevada and New Jersey. With the right buyer, the WSOP brand could easily be spread into states that are already in the process of passing online gambling legislation, such as Michigan or Pennsylvania.
Strategic Benefits to a Third Party Acquiring the WSOP Brand
The acquisition of WSOP.com would be an especially smart move regarding the potential Pennsylvania online gaming market. The state is plagued with serious budget deficits that could be alleviated by striking a deal with such a high-profile brand, especially alongside the introduction of daily fantasy sports. Because WSOP.com already has a long, reputable history and major brand recognition, it could even help other states who are hesitant to open a discussion be more accepting of the idea of regulated online gambling.
There are so many strategic possibilities surrounding the fact that GIG has excluded WSOP.com from its bid. Truthfully, any company that is looking for an easy way to get a foot in the door of the massive New Jersey and Nevada online poker markets should be jumping at the chance to purchase the brand. Until now, the chances for new online poker companies to gain traction in either of these United States markets were slim, simply because the current brands are already so entrenched and command such a hefty portion of the market share.
As it stands, Caesars is buried in over $20 billion of debt, which means that the time is right for interested third parties to slide in and make an offer.