Before the stock markets opened yesterday, online gaming software developer CryptoLogic announced that it will likely lose one of its main poker licensees. Immediately thereafter, CryptoLogic's stock prices dropped approximately 25 percent.

UK gambling site Betfair is reportedly considering a move to in-house online poker software, instead of the third-party arrangement it currently has with CryptoLogic. The Betfair decision is far from final, as the company is still amidst talks with CryptoLogic.

Following the announcement, stock prices fell from $29.00 to $21.77, early on in the trading day, but rose back up to $22.30 within a few hours. By midday, over 413,000 CryptoLogic shares had been traded.

Online poker software generated 30 percent of CryptoLogic's revenues in Q2. Betfair is one of nine online poker software licensees signed on with CryptoLogic, and losing its licensing deal with Betfair would likely translate into far from negligible losses for the software developer.

If Betfair moves forward in developing its own online poker software, the finished product can be expected to debut in early 2006. Thus, CryptoLogic said that losing the Betfair license would most likely not affect results for the 2005 fiscal year. The brunt of the change would be felt in 2006, if CryptoLogic does not succeed in recruiting new licensees to replace Betfair.

Source:  Poker777 Staff

Wednesday, 10 August 2005