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WPT ENDS RELATIONSHIP WITH CRYPTOLOGIC
World Poker Tour Enterprises could be about to shut down its troubled online poker operations at WPTonline.com following an advisory report to the SEC filed October 17 which announces that the firm's 3 year poker network deal with turnkey provider and network Cryptologic is to be prematurely terminated on November 14 2008.
Because the deal only commenced in mid-2007, and was expanded earlier this year to 2011 (see previous InfoPowa report) the contract still has over two years to run, and there may be compensation claims from the software provider, although there have been no statements by either company thus far on this aspect.
Original SEC filings on the initial Cryptologic agreement indicate that the Dublin-based software company was guaranteed minimum guaranteed payments of $750 000 a year, with the proviso that should revenues drop below that level then WPT would make appropriate adjustments to ensure that the agreed monthly figure was met.
WPT's disclosure to the SEC notes that the company could remain in the online poker business with new software and management.
WPT's business experiences with online poker have not been happy; in 2006 the company tried to go it alone in developing software in Israel and setting up a website and supporting infrastructure. This did not appear to come together successfully, leading to the deal the following year with Cryptologic and its subsidiary Wagerlogic.
Although WPT is debt free and has ample assets, it has experienced declining stock prices to the extent that it was recently warned by Nasdaq (see previous InfoPowa report) that it could be delisted if its share price remained under the $1 mark for more than 30 days. It has yet to recover higher than the $1 level.
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