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Where's the Money Going?

With the online casino industry really taking off in established markets, and spreading to all new markets, it’s a little befuddling by some of these internet gambling companies are still reporting quarter loses. The Unlawful Internet Gambling Act (UIGEA) in the United States did set back a few companies like CryptoLogic, and others that had to face reorganization costs as they exited the U.S. online casinos market. But beyond that obvious setback, the very established Bwin Interactive, based out of Vienna, Austria, has reported second quarter loses for the second year running.

Bwin Interactive is the largest online casino gambling group in Europe and offers a range of services across the board. New partnerships and more lenient and inclusive legislation in Europe has put Bwin in a more stable place – but even if the loses are less than they were in 2006, it still begs the question why this online casinos company is reporting losses at all?

One apparent reason that the company is reporting less loss is the cutbacks in the online casino sportbooks marketing budget. Bwin reported a marketing and promotions budget of Euro 60 million for 2006. This year, the budget holds at Euro 25.6 million.

Bwin is active in the online casino and sportsbetting industry – the second quarter revenue from this sector of the company were down Euro 37.4 million. On the up side, the second quarter loses for 2006 were Euro 28.6 million, and this year Bwin’s report claimed only Euro 5.6 million. The trend is in the right direction. The Q2 results also indicated that the online casino betting company anticipates margins in the range of eight to ten percent.