Kapitall – Dennis Rodman is at it again. The former basketball star’s foray into international affairs continues this week as he returns to North Korea under the somewhat dubious and self-appointed moniker of “basketball diplomat.” There are obvious drawbacks to having a reportedly unstable former basketball star serve as the primary point-man in one of the most idiosyncratic international relationships of the day. But Rodman’s second trip has a decidedly less academic feel than his first, sponsored by Vice Media. Instead, Rodman has donned a black baseball cap from a new sponsor, Irish bookmaker Paddy Power (PDYPF), and has renounced all speculation that the trip has any political implications.
We could easily spend all day analyzing this story. Just from a business perspective, it represents an important phenomenon playing out in international markets – the globalization of online gambling. The fact that North Korea is being used by Paddy Power for a bit of publicity is particularly inane. The communist dictatorship is hardly known for displays of wealth outside of official government pageantry, and life is so hard there for many that as recently as the 1990s roughly a tenth of the country’s population starved to death each year.
Regardless of the delicacy (or lack thereof) in their advertising practices, purveyors of online gambling have had an amazing year. Net revenue for Paddy Power for instance, went up 22% this year. Earnings in the UK and Europe are more robust than in the United States, where online gambling has only been legalized in a handful of states. Online gambling is more established in Europe, although some are speculating that many of the largest firms, including GVC (GMVHF) and William Hill (WIMHF) – are likely to see profits dip as their governments institute new taxes. However, others see even more growth prospects in this sector, pointing to what will likely be a highly lucrative partnership between Paddy Power and Facebook (FB) – the most explicit partnership between social networking and online gambling to date.
Paddy Power and Facebook’s alliance has got to be troubling to American firms like Zynga (ZNGA) and SHFL Entertainment (SHFL) – both of which have made huge investments by buying up patents and mobile gaming technology. Paddy Power, which allows its users to bet on anything from football matches to the sex of the royal baby, is not really a gaming concern. However, it’s not hard to see the potential growth in combining bookies with social networking, as geographically isolated fans will soon be able to bet on their favorite sports against users from across the world. This could possibly explain the allure of a Dennis Rodman sponsorship, whose fame and tabloid-readiness will give the Irish firm new American visibility.
