By Joe Zusman | May 6, 2009

A recent article in the London Online Times has pushed to the spotlight the thoughts of consolidation in the poker world.

The article, written by Matthew Goodman, reports that the online gaming giant PartyGaming is in discussions with fellow gaming organization Gigamedia with the potential for several different outcomes. It is known that Gigamedia has been looking for an organization to purchase one part of its operation – the World Series of Poker sponsoring company Everest Poker – or to purchase the company outright. PartyGaming has been at the forefront of merging companies into its operation and, by obtaining either Everest Poker or Gigamedia, would once again have a sponsorship at the WSOP, which they had several years ago.

There is a critical bone of contention that could potentially block the sale, however. PartyGaming, which is traded on the London Stock Exchange, may not be an attractive alternative to the stockholders of Gigamedia, which is traded on the American NASDAQ exchange. Even with this said, Gigamedia has been open about the company itself or integral components being for sale, stating last month that they were in discussions with a handful of companies for either outcome.

Both sides are not speaking about the negotiations in public. A PartyGaming spokesperson said, “We have made it very clear we believe the industry will consolidate and we will look at opportunities as and when they arise.” Gigamedia told its investors that the company was, “…in discussions with several interested parties concerning the possibility of a strategic merger or a sale.” As of press time, PartyGaming was trading at 281.50p on the LSE while Gigamedia was trading at $6.55 on the NASDAQ exchange.

In April, PartyGaming settled their long-running dispute with the U. S. Department of Justice when they signed an agreement regarding the company’s actions before the enactment of the Unlawful Internet Gaming Enforcement Act (UIGEA) in 2006. The $105 million settlement has cleared the company of any further litigation by the American government and opened up many options for the company if or when the United States opens its doors to regulated online gaming operations.

Prior to this, PartyGaming CEO Jim Ryan has stated his opinion that the online gaming world is on the verge of mass mergers and/or acquisitions. During the announcement of the settlement with the U. S. DoJ, Ryan said, “The resolution of our position with the U. S. authorities marks an important day for PartyGaming. It has been a long and complex process, but we have reached an amicable solution with the USAO that makes commercial sense for our business and is in the best interests of shareholders. We are now well-placed to seize organic as well as strategic opportunities that previously were beyond our reach.”

At this time, it appears that one of the opportunities that Ryan was speaking about is a deal with Gigamedia in some form. Tight Poker will continue to keep you informed as to the future of the negotiations.

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