In a report on the global casino gaming industry, consulting and auditing firm, PwC notes that one of the challenges faced by the industry is continuing global economic uncertainty.
PwC says in the report that the global economic uncertainty has led to a subdued state of consumer spending. One notable exception is the Asia-Pacific region. Spending in the region had been robust between 2009 and 2013.
The growth in the Asia-Pacific region of course was driven by China. According to PwC, spending in the region in 2010 alone grew an impressive 49.7%, driven by new capacity in Macau and Singapore. The impressive growth continued in the next three years, however, the crackdown on corruption in China and general economic weakness has led to a slowdown in spending in Asia-Pacific and especially Macau.
Indeed, the outlook for gaming in Macau has been bearish for a while. One of the main reasons is the crackdown on corruption on the Mainland. Regulations put in place by Mainland authorities have also had a negative impact. In fact, Macau is even shifting its focus towards making itself a leisure destination in order to cut reliance on gambling revenue.
Given the challenges, consolidation is one way companies in the casino gaming sector can build robust operations. Contagious Gaming Inc. (TSX-Venture:CNS), a Canada-based developer of unique and engaging software solutions for regulated gaming and lottery operators around the world, is already considering a potential acquisition.
In August, the company had confirmed that it is in talks with Sportech on a possible business combination that may create a combined, technology-focused, sports wagering company and a global leader in regulated pari-mutuel wagering.
CNS believes that a business combination will create significant value for existing and potential new shareholders of both companies. As per the August press release, CNS had until September 11, to announce a firm intention to make an offer for Sportech. This morning, the company announced that at the request of Sportech, the Panel has consented to an extension of the September 11 deadline. The new deadline is 5 p.m. on October 9
CNS, however, noted that there is still no guarantee that at the end of the deadline period, it will have a firm offer for Sportech. There is also a possibility of further extension of the deadline with the consent of the Panel.
2015 has not been a friendly year for CNS as its shares have basically halved over the last nine months, currently trading at $0.305 a share late in Friday’s trade.
