Bwin.Party close to selling off money-losing social casino games

Bwin.Party Digital Entertainment, one of the big online gambling operators in Europe, said it is close to selling its money-losing social gaming business, Bloomberg reported.

That says a lot about the cyclical nature of the social-casino games boom. The rise of social gaming was strong in 2011, leading to the creation of more than 100 startups focused on these games. Companies viewed this as a way to draw customers into the more lucrative online gambling sites or actual casinos.

But the market share for social casino games has concentrated into a handful of operators, and Bwin.Party is not one of the winners, based on data from analyst firm Eilers Research. The company said it would lose $8.5 million for the social casino games business in 2014.

Now we’re seeing something of a shakeout.

“We are in active discussions regarding the sale of Win, the group’s social gaming business and expect to make a further announcement shortly,” the Gibraltar-based company said today in a statement to Bloomberg. “The group is continuing its discussions with several parties regarding a variety of potential business combinations with a view to creating additional value for Bwin.Party.”

Online gambling on websites and mobile devices is legal in a few U.S. states, but the revenues haven’t been huge, with no indication that the rest of the states will legalize digital online gambling soon. That has taken some of the air out of the plans for gambling companies to assemble physical locations, online gambling, and social casino game properties into a single business.

Bwin.Party has a big business in sports betting, and it also owns an online payment service. It expanded into social gaming in May 2012 with the announcement of a $50 million investment. The company is also losing money on its online gambling business in New Jersey.