The Online Poker Sector - An Overview Of Regulation And Markets

WHITE PAPER The Online Poker Sector An Overview of Regulation and Markets PRESENTED BY IGamingNews COMPILED, DESIGNED AND EDITED BY Christopher A. Krafcik | Editor | IGamingNews

ST. CHARLES, MISSOURI MAY 2009 © CLARION GAMING 205 S. MAIN STREET | ST. CHARLES, MO. 63301 | UNITED STATES OF AMERICA WWW.CLARIONGAMING.COM

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IGAMINGNEWS WHITE PAPER | Table of Contents Introduction + + + + + + + + + + + + + + + + + + + + 5 Regulatory News - - - - - - - - - - - - - - - - - - - - - - - - - 7 Regulatory Spotlight + + + + + + + + + + + + + + + + 13 Deals: Done and Rumored - - - - - - - - - - - - - - - - - - 17 Exposed + + + + + + + + + + + + + + + + + + + + + + 21

IGAMINGNEWS WHITE PAPER | Introduction Data consultancies and analysts agree the Internet poker market is growing, though it is controlled by a small number of operators targeting the United States. Currently, there are around 600 poker Web sites and 38 poker networks operating from different licensing jurisdictions around the world.1 In the 2009 calendar year, Global Betting and Gaming Consultants, a data consultancy, expect online poker will grow 10.8 percent, year over year, to $3.9 billion in gross gambling yield. By geographic segment, Europe is projected to grow 15.5 percent to $1.82 billion, and North America, a more modest 7 percent to $1.65 billion. If GBGC estimates hold, 2009 will be the first year Europe generates more in gross gambling yield, for poker, than North America.2 In May 2009, when this introduction was written, PokerStars, an operator licensed on the Isle of Man, controlled around 36 percent of the world's poker traffic.3 Its nearest competitor, FullTilt, which is licensed in the Mohawk Territory of Kahnawake, controlled approximately 16 percent. Both companies target the United States, where a number of prohibitive state and federal laws target online poker directly or indirectly. Rounding out the top five, now, are the European firms Playtech Ltd., PartyGaming and Bwin Interactive Entertainment A.G., which control 9.6 percent, 6.9 percent and 4.2 percent of the traffic, respectively. None of these companies takes play from the United States. All are publicly traded. As the data consultancy H2 Gambling Capital has put forward, IGamingNews also believes the Unlawful Internet Gambling Enforcement Act (UIGEA), a United States law which took effect in October 2006, could reshape the current distribution of player traffic among operators in the near-to-medium term. Generally speaking, the UIGEA makes illegal the processing of online gambling money transactions; after considerable delay, its final regulations were issued in

Latest estimate of PokerScout, a Web site that tracks online poker traffic in real time. Since the 2004 calendar year. 3 The author arrived at this figure by adding the respective seven-day averages of PokerScout.com's top 20 sites, then dividing each seven-day average by the seven-day-average sum. 1

2

November 2008. Financial institutions covered by the law were given until December 2009 to comply with the regulations.4 Should those institutions begin enforcing the UIGEA from late 2009, business for PokerStars, FullTilt and other United States-facing poker operators could be disrupted, though the magnitude of that disruption remains difficult -- if not impossible -- to assess. Assessing the law's impact on traffic distribution, arguably, has become even more difficult in light of a new federal bill that, if enacted, would push the UIGEA's compliance deadline back to December 2010.5 In Europe, meanwhile, it is expected a number of poker operators -- especially those for whom player liquidity levels have declined in recent years -- will begin to consolidate. Despite this expectation, however, only a very small number of deals have been consummated in the 12 months to May 2009.

4 Mark Hichar, The UIGEA Regs | A Lawyer's Analysis, IGAMINGNEWS, Nov. 17. 2008, . 5 Christopher A. Krafcik, Frank Delivers New Bills, IGAMINGNEWS, May 6, 2009, .

IGAMINGNEWS WHITE PAPER | Regulatory News In 2009, a number of jurisdictions around the world have elected to include Internet poker in legislative proposals.

United States | State Level California In early 2009, a bill called the California Online Poker Law Enforcement Compliance and Consumer Protection Act was submitted to the state's Legislative Analyst. In its current form, the bill instructs the California State Gambling Commission, in conjunction with the state Department of Justice, to draft and adopt regulations for the implementation of an online intrastate poker network. It is likely, however, that the bill will be amended should it pass through the Legislature. As of May 2009, the bill remains without a sponsor in the state Legislature, but is being supported by its citizen sponsor, a grassroots advocacy group called the Poker Voters of America. Five American legal commentators polled by IGamingNews in mid-April named California as the likely front-runner to regulate and license online poker. Additional Coverage in IGamingNews Calif. Poker Bill Unveiled IGamingNews has obtained a copy of a highly anticipated bill -- the California Online Poker Law Enforcement Compliance and Consumer Protection Act -- that would see online poker regulated on an intrastate basis in the Golden State. Insights | State by State IGamingNews asked the United States' top Internet gambling lawyers about which states they think will be the first to regulate some form of Internet gambling.

Florida An appropriations bill in the Florida Senate, SB 682, was amended on April 16, 2009, with language calling for the state to conduct a study on Internet poker. That amendment read: The Office of Program Policy Analysis and Government Accountability shall perform a study and make recommendations to the Legislature by December 1,

2009, regarding the enactment of laws to provide for protection and remedies from existing and unregulated online poker activities, which currently lack oversight and consumer protection. SB 682 died in session before receiving a vote. Before the legislative session concluded on May 1, however, the Internet poker study language was added to a House bill, HB 425. As of May 8, HB 425 had been enrolled -- meaning it had passed both chambers of the state Legislature -- but had yet to be signed by Governor Charlie Christ. Additional Coverage in IGamingNews Fla. Senate Bill Amended with Internet Poker Study Language The Florida Legislature was abuzz last week with developments regarding Internet and video poker. Fla. Senate Bill Still without a Vote Florida Senate Bill 682, which calls for a study of Internet poker to be presented in December, has again been moved to special order calendar. Fla. Internet Poker Study Awaits Governor's Signature A Florida bill with Internet poker study language attached has passed through the state's Legislature and awaits Governor Charlie Christ's signature.

United States | Federal Level Barney Frank Barney Frank is the chair of the House Financial Services Committee and, in recent years, has emerged a powerful ally of the Internet gambling industry. In April 2007, he introduced a bill called the Internet Gambling Regulation and Enforcement Act, which, if successful, would have seen online gambling legalized and regulated in the United States. The bill garnered just 48 co-sponsors, the majority of whom, like Mr. Frank, were Democrats. A similar version of that bill was reintroduced in May 2009. Additional Coverage in IGamingNews Frank Expects to Introduce Bill Next Week Analysts are hopeful that the Democratic-controlled Congress will help grease the rails for Barney Frank's expected bill.

U.S. Land Operators Not Champing at Online Bit, Analyst Says Should Barney Frank’s Internet gambling legislation be introduced, then enacted, one American gaming analyst doesn’t expect most members of the United States’ land-based gambling industry to jump immediately at the opportunity to launch online. In Afterglow of Obama Inauguration, Caution Is the Word, Lobbyists Say Two United States I-gaming lobbyists say the jury remains out on how and whether the new Obama administration will engage with the historically thorny issue of Internet gambling.

Lobbying Lobbying remains an art delicately practiced in the United States, with landbased casinos, racing interests, religious conservatives, sports leagues, the banking industry and I-gaming advocacy groups all pushing Internet-gamblingrelated agendas. In the fourth quarter of 2008, according to government filings, the Interactive Gaming Council, whose members include Microgaming Software Systems Ltd. and 888 Holdings, spent $667,705 lobbying various Internet gambling bills. A long-time Internet gambling opponent, the National Football League, spent an estimated $53,333, while the Family Research Council, also an opponent, spent approximately $1,400. IGamingNews expects lobbying spend to have risen considerably in the first and second quarters of the 2009 calendar year, given the expected introduction of Barney Frank's new bill. Figures have yet to be released. Additional Coverage in IGamingNews $2.5 Million Spent Lobbying I-Gaming Policy in Fourth Quarter Approximately 30 parties spent an estimated $2.5 billion lobbying United States Internet gambling policy in the fourth quarter of 2008. Bush Aide Accused of Lobbying UIGEA According to a letter obtained by IGamingNews, United States Representative Steve Cohen is asking whether a top presidential adviser appointed this year, who lobbied against Internet gambling before his appointment, was involved in pushing to finalize the proposed UIGEA regulations on behalf of a former lobbying client.

France Eric Woerth, the French budget minister, in early March unveiled a proposal that would see portions of the country's online gambling market opened to commercial competition.

France generates about 5 billion euros each year from licensed gambling operations, which include horse betting, sports betting, casino gambling and lotteries, a person briefed on Mr. Woerth's proposal told IGamingNews. Under the new proposal, which was presented to the French Cabinet in late March, three sectors will be liberalized: parimutuel horse betting, fixed odds sports betting and online poker. The person said these sectors will be opened, in part, because they're popular, but also because the government considers them to be the least addictive forms of wagering. Not surprisingly, operating online slots, casino table games like roulette, and spread betting will not be allowed. The betting duty has been tentatively set at 7.5 percent, and, for poker, a 2 percent tax on buy-ins. The license application process is expected to begin in the second half of 2009, with the first licenses set to be issued on Jan. 1, 2010. Ahead of any new regulation taking effect, online betting operators like Bwin Interactive Entertainment A.G., Betclick and Unibet have been aggressively inking marketing-partnership deals. Additional Coverage in IGamingNews French Regulatory Proposal Unveiled, Tax Regime Draws Criticism As promised, France has released a draft proposal that would liberalize its hitherto monopolistic gambling market, but online gambling industry observers are already raising eyebrows at the government's proposed tax regime. I.M. Round Table | French Regulatory Proposal Anouk Hattab-Abrahams of the Brussels law firm Ulys and Lorien Pilling, head of research at Global Betting and Gaming Consultants, dissect and debate the new French regulatory proposal in an online chat moderated by IGamingNews' Jeanette Kozlowski. French Marketing Race Hotting Up With France's online betting and poker markets soon to be liberalized, it appears the country's media companies and football clubs are already lining up to sign deals with gaming operators ahead of the January 2010 opening. French Budget Minister Brokers Advertising Truce It appears the French budget minister has managed to stop the influx of online gambling advertising from foreign operators by securing agreements with those operators and, surprisingly, the French gambling monopolies.

Denmark The Danish Ministry of Taxation announced in April that the country's hitherto monopolistic gambling market will be partially liberalized. A press release on the ministry's Web site indicated that under forthcoming legal reform, licenses will be made available for online poker, casino games and sports betting. "The objective of a partial gambling liberalization is to ensure better protection of players, avoid economic crime through gambling and ensure continued revenue for distribution to non-profit causes," the ministry said. Under existing legislation, Danske Spil A/S, the national lottery, is the sole Internet gambling concessionaire. It went online in 2003 and offers a number of its offline games in electronic format. Additional Coverage in IGamingNews Danish Monopoly Broken | A Lawyer's Analysis Henrik Norsk Hoffman, an attorney with the law firm Lett in Denmark, answered questions by telephone about the Danish Ministry of Taxation's announcement that sectors of the country's monopolistic gambling market will be liberalized. Denmark's Hidden Jewel TV2, a state-owned broadcaster in Denmark, has become the country's first domestic company to provide online skill games with real-money wagering. No hostile response is expected from the government or the gambling monopoly, Danske Spil, because games of skill are not covered by national gambling laws.

Switzerland The Swiss Department of Justice and Police in April said the country should relax its existing restrictions on Internet gambling and issue licenses to a limited number of operators. In March 2007, the Federal Council -- Switzerland's seven-member head of state -- instructed the Justice Department to prepare a report examining whether the country should ease a prohibition on Internet casino and poker services. That report -- loosely translated as "Consideration of whether to relax the ban on using an electronic communications network for the operation of gambling" -was completed on March 31, 2009. Among other things, the report recommends that future license holders limit their offering to Swiss residents, exclusively, and that gambling licenses for other mediums -- including interactive television, telephone and mobile telephones -should not be issued.

George Häberling, an attorney the law firm Häberling in Switzerland, told IGamingNews he expects as few as two licenses to be issued given the online market there is valued at between 30 and 40 million Swiss francs in gross gaming revenue. Mr. Häberling expects members of the country's land-based casino industry may form joint ventures and bid for the licenses. He said it will be three years before legislation is implemented. Additional Coverage in IGamingNews Swiss Regulatory Proposal | A Lawyer's Analysis George Häberling, an attorney the law firm Häberling in Switzerland, answered questions by telephone about the country's intention to introduce a limited online gambling license regime.

IGAMINGNEWS WHITE PAPER | Regulatory Spotlight As expected, new United States regulatory legislation was introduced in May. Frank Delivers New Bills By CHRISTOPHER A. KRAFCIK Published: Wed., May 6, 2009

Internet gambling's most powerful congressional ally on Wednesday introduced two bills that, respectively, would see I-gaming regulated in the United States and the UIGEA's compliance deadline pushed back. Barney Frank, chairman of the House Financial Services Committee, unveiled both bills this morning at a press conference in Washington, D.C. "My fundamental reasons for doing this are that the government should not interfere with people's liberty unless there's a good reason," Mr. Frank said at the conference. The first bill, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act, is a follow-up to Mr. Frank's April 2007 bill called the Internet Gambling Regulation Enforcement Act. It would establish a regulatory regime in the United States, with the Secretary of the Treasury to act as licensing authority. A lobbyist close to the process in Washington, who requested anonymity, told IGamingNews Wednesday the 2009 bill departs from the 2007 bill in that it prohibits any sports-wagering activity that violates the Professional and Amateur Sports Protection Act. The sports protection act -- or PASPA, as the law is sometimes called -- was enacted in 1992 and effectively prohibits sports betting in all but four states. "Congressmen Frank's new bill uses a PASPA standard -- it prohibits any wager that would violate PASPA -- but I believe the intent is that it would not allow licensees to accept Internet wagers on sports," the lobbyist said. In IGamingNews' fourth-quarter report on federal lobbying spend, professional and amateur sports leagues -- long opponents of Internet gambling -- spent an estimated $75,500 lobbying Internet-gambling-related legislation. Mr. Frank's new regulatory bill will also face opposition from social conservative groups like the Family Research Council, a Christian organization, and Focus on the Family.

"It's a sad day when a public servant like Representative Frank works so hard to willfully legislate harm to families under the pretense of freedom," Chad Hills, an analyst for Focus on the Family, told IGamingNews last year in response to one of Mr. Frank's previous bills. In Congress, Republican resistance is expected to be stiff -- Mr. Frank's 2007 bill received just 48 co-sponsors, the majority of whom were Democrats. Republicans Peter T. King of New York and Ron Paul of Texas, however, will be supporting the bill. Spencer T. Bachus, the ranking Republican member of the financial services committee, has already come out against the new regulatory bill. "Illegal off-shore Internet gambling sites are a criminal enterprise and allowing them to operate unfettered in the United States would present a clear danger to our youth," Mr. Bachus, who was an author of the UIGEA, said in a prepared statement Wednesday. Mr. Frank's regulatory bill is not without its supporters, however. Michael Waxman, spokesman for the Safe and Secure Internet Gambling Initiative, a backer of Mr. Frank's legislation that doesn't lobby Congress, called Mr. Frank's decision to continue advocating for Internet gambling "encouraging." In an e-mail to IGamingNews, Clive Hawkswood, chief executive of the United Kingdom's Remote Gambling Association, an industry trade group whose members include PartyGaming, commended Mr. Frank for "seeking to steer the ship in the right direction." The Poker Player's Alliance, a player advocacy group that lobbies Congress, said in a prepared statement that it was "grateful for Chairman Frank's leadership," adding it would be activating its "grassroots army made up of over one million members to help him drive legislation." But the American Gaming Association, the country's most powerful gambling lobby, told IGamingNews Wednesday it remains neutral on Internet gambling "because of the divergent views of its members." The commercial gambling sector, as expected, was measured in responding to the new regulatory bill. Brian H. Hadfield, chief executive of CryptoLogic Ltd., the Nasdaq-listed software developer, told IGamingNews Wednesday: "While it’s difficult to speculate on exactly how we would act until we see the legislation and any subsequent regulation, what I can say is that CryptoLogic has always advocated a regulated environment -- and so we welcome Barney Frank’s direction."

International Game Technology, the Nevada-based gambling technology supplier who owns WagerWorks, and 888 Holdings, a Gibraltar operator, did not return phone calls and e-mails by press time Wednesday. Betfair declined comment. Legal experts, meanwhile, expect the bill, in some form, will pass the House, but that the Senate may be a tougher sell. "The Senate majority leader from Nevada, Harry Reid, is powerful, and you've got to convince him," Joseph M. Kelley, a business law professor at State University of New York, Buffalo, told IGamingNews Wednesday. "Right now, he seems to have not come out in favor of regulation." In the House, there are 256 Democrats, 178 Republicans and one vacancy, and in the Senate, there are 59 Democrats, 40 Republicans and one unresolved seat. It is thought that a piece of legislation identical to Mr. Frank's regulatory bill will be introduced in the Senate, and Mr. Kelley speculated that Senator Robert Menendez, Democrat of New Jersey, could sponsor it. (Mr. Menendez, recall, introduced the Skill Games Licensing and Control Act in September 2008.) The Washington lobbyist expects Mr. Frank's regulatory bill to "go through some permutations," but believes chances for Senate passage are good. Mr. Frank said he hoped to move on the legislation before congressional break in August. "We have a couple of other things on the agenda as you might've noticed, like regulating the financial structure of the country," Mr. Frank joked with respect to the ongoing financial crisis. UIGEA D e l a y Mr. Frank's second bill, the Reasonable Prudence in Regulation Act, would delay the UIGEA compliance deadline by one year to December 2010. Regulations for the UIGEA took effect in January 2009, but non-exempt participants in designated payment systems -- including automated clearinghouse systems -- were given until this December to comply with those regulations. "I think Congressmen Frank believes that once his licensing bill is enacted, then the standard for UIGEA should be to block payments to people who aren't licensed," said the Washington lobbyist, when asked about Mr. Frank's motivations for introducing the bill. "So he wants to hold off on the compliance with the existing regulations until there's a chance to enact a licensing regime and make that the basis of enforcement."

The bill is understood to be supported by both Internet gambling and banking interests, though the American Bankers Association, a trade group that lobbies Congress, did not return a phone call by press time Wednesday. Mr. Frank's most successful bill to date, the Payment Systems Protection Act, sought to clarify what the UIGEA intended by "unlawful Internet gambling." It was approved in a 30-to-19 vote by the financial services committee in September 2008 but died in session. The Taxman C o m e t h Representative James T. McDermott, Democrat of Illinois, on Wednesday introduced the Internet Gambling Regulation and Tax Enforcement Act of 2009, the tax companion to Mr. Frank's new regulatory bill. The tax enforcement act is a follow-up to Mr. McDermott's 2007 bill by the same name and proposes a 2 percent tax on customer deposits to be paid monthly. A recent analysis performed by PricewaterhouseCoopers for UC Group, a London payment processor that lobbies Congress, suggested Internet gambling could generate as much as $52 billion in tax revenue over the next decade. “We are losing billions of dollars in federal and state taxes every year because a prior Administration and its supporters drove legitimate U.S. online gambling off-shore by passing an ill-conceived late-night amendment in Congress that has done nothing except make Americans more vulnerable to scams when they wager online and cost us billions in lost revenue,” Mr. McDermott said in a prepared statement Wednesday. Additional Coverage in IGamingNews The Frank Bill | A Lawyer's Analysis Mark Hichar, an attorney with the law firm Edwards Angell Palmer & Dodge, analyzes Barney Frank's new bill, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act.

IGAMINGNEWS WHITE PAPER | Deals: Done and Rumored A non-exhaustive list of recent M&A transactions, rumors and b-to-b deals in the online poker space. Microgaming || L a d b r o k e s Ladbrokes, which, previously, had operated a standalone poker room on software from Microgaming Software Systems Ltd., announced in August 2008 that it would join the Microgaming poker network from the 2009 fiscal year. William Hill || P l a y t e c h In October 2008 William Hill purchased online gaming, marketing and customer-service assets from Playtech Ltd., significantly expanding the breadth of its Internet business. That transaction saw created a new joint venture called William Hill Online, in which William Hill currently holds 71 percent, with Playtech holding the balance. As part of the October deal, William Hill also announced the migration of its casino and poker propositions to Playtech's software platform and poker network, respectively. The poker migration was completed ahead of schedule, and William Hill said in April 2009 that its main casino would be moved from CryptoLogic Ltd.'s software to Playtech's later this year. CryptoLogic || G t e c h CryptoLogic Ltd. announced in November 2008 that it would outsource its poker operation to Gtech Corporation's International Poker Network. The move came as little surprise because CryptoLogic's poker network had been trending downward since 2006. That year, the United States enacted the Unlawful Internet Gambling Enforcement Act and Betfair, a major licensee, left to form its own poker network. CryptoLogic finished migrating its licensees to Gtech's network in March. Absolute Poker || U l t I m a t e B e t UltimateBet and Absolute Poker, the disgraced online poker operators, in November 2008 launched a new, joint poker network called Cereus.

Microgaming || P l a y w I z e In December 2008 Microgaming Software Systems Ltd. emerged the buyer of Playwize's three-dimensional poker technology, and the Isle of Man company told IGamingNews then that a number of its 47 poker licensees had expressed interest in the software. PartyGaming || C I r s a Making good on a fourth-quarter promise to "overdeliver and surprise," PartyGaming in February 2009 announced a three-year deal with Spain's Cirsa Gaming Corporation, a terrestrial operator with ties to the Latin and South American markets. Little color on the deal was given, but the two companies are to explore online gaming opportunities in Spanish-speaking markets. The deal would appear timely for both operators, with Spain's ruling Socialist Worker's Party under intensifying pressure to introduce national Internet gambling regulation. Playtech || C a s I n o G r a n M a d r I d Playtech Ltd. in March 2009 did a casino and poker licensing deal with the landbased Spanish operator, Casino Gran Madrid. PartyGaming || H a r r a h ' s In April 2009 word leaked via the London press that Mitchell A. Garber, the former chief executive of PartyGaming, had been appointed by Harrah's Entertainment Inc. to run a new online subsidiary. Both companies declined comment when contacted by IGamingNews, but Mr. Garber's as yet confirmed appointment has perpetuated rumor of a tie-up between PartyGaming and the casino giant. PartyGaming || G I g a M e d I a In April 2009 PartyGaming and GigaMedia Ltd. declined comment to IGamingNews after rumor surfaced the two companies were in bid talks. Arthur M. Wang, chief executive of GigaMedia, said in March that his company was in talks with a number of parties regarding a possible merger or sale. Gaming VC || U n k n o w n S o u t h A m e r I c a n O p e r a t o r In April 2009 Gaming VC announced it could acquire a South American sports betting and gaming business it did not identify.

IGAMINGNEWS WHITE PAPER | Market Spotlight The phrase "exceeding expectations" has been touted by most entrants of the newly liberalized Italian online poker market. In May 2009, Graham Wood, an IGamingNews contributor and consultant with specialist knowledge of Italian gaming, reported on the country's sensational growth trends. Led by Poker, Italian Growth Story Continues By GRAHAM WOOD Published: Thurs., May 7, 2009

In Italy the population’s passion for gambling appears to show no bounds as records continue to be broken. The first quarter of 2009 saw turnover on all forms of gaming average 150 million euros per day, and the first data for April reveal no slowdown in spending. Italy’s slot machines alone generated 6 billion euros in turnover while scratchcards continued to attract interest, with the range of Gratta e Vinci products clocking up 2.6 billion euros in the first three months of 2009. Spending on traditional Lotto, meanwhile, came in at 1.4 billion euros during the same period. Sports betting hit new records. The amount staked was up to 1.1 billion euros in the first quarter and, for the month of April, grew 20 percent to over 400 million euros versus the previous-year period. It appears, though, that Italian punters are beginning to wise up. The percentage payout rose to over 82 percent (meaning bookmakers’ profit margins shrunk to below 18 percent). Nevertheless, those figures are substantially higher than the percentage operators tend to retain in other markets. Online poker continues to fuel increases in turnover -- both directly and indirectly -- but online gaming of all forms has increased substantially of late: a result of new punters being attracted to poker, then crossing over to other products. This phenomenon is certain to go on. In the wake of a recent earthquake in L'Aquila, the government announced plans to raise tax revenue through further liberalization of the gaming sector. The income will be used to fund reconstruction projects in affected areas. Significantly, cash games are to be introduced to Italian poker rooms, the sports betting product is due to become more competitive and online bingo is due to be introduced before long.

In the first three months of 2009, online-gaming spend totaled 850 million euros, with average daily turnover increasing as the quarter progressed. March spend topped the previous month’s with a daily figure of 10.2 million euros per day -- 5.2 million euros of which came from poker. And between January and March, poker brought in 467 million euros. Sports betting turnover was just short of 330 million euros during the threemonth period. Online scratchcards, meanwhile, proved to be more popular than horseracing, with spending on the games reaching 22.7 million euros compared to 22 million euros on racing. As expected, the domestic market leaders in the online poker market are beginning to lose market share since the arrival of some of the overseas industry heavyweights. But Gioco Digitale S.A. is still maintaining its lead despite a sharp fall in its turnover in April. Total tournament fees for the month were down over 12 percent to 51.3 million euros, but still accounted for 27.9 percent of April’s total of 184.7 million euros. The specialist operator Microgame, which provides a white label service to smaller Italian operators and a number of larger concerns like Globet and Betshop, managed to consolidate its market share. The dozens of poker rooms on the network produced 47.8 million euros in tournament fees during April, up 67 percent on March’s figure, yielding a share of 25.8 percent. The big winner in the poker market was PokerStars, which, having built up a substantial customer before gaining licensure, was able to hit the ground running when it launched the real-money product in March. By April, PokerStars had managed to secure fourth place in the market (behind Lottomatica S.p.A.) by generating over 16 million euros, or 8.7 percent of the monthly total.

IGAMINGNEWS WHITE PAPER | Exposed A non-exhaustive list of the industry's publicly traded players and their exposure to poker, taken as a percentage of total revenue, during the 2008 fiscal year. PartyGaming || 5 8 p e r c e n t GigaMedia || 5 4 . 9 p e r c e n t 888 Holdings || 3 0 . 1 p e r c e n t Playtech || 2 6 . 9 p e r c e n t CryptoLogic || 2 2 . 6 p e r c e n t Bwin || 2 2 . 4 p e r c e n t Unibet || 2 1 p e r c e n t Betsson || 1 9 p e r c e n t Sportingbet || 1 5 p e r c e n t Ladbrokes || 2.5 p e r c e n t