Documente Academic
Documente Profesional
Documente Cultură
OF PAIGOW
Draft Business Plan
Note: Names and details from the original version of this document have been changed.
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TABLE OF CONTENTS
1.
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1. EXECUTIVE SUMMARY
1.1. Company Background
The World Series of Paigow (WSP) is a U.S.-based gaming media company focused on expanding the popularity of
Asian gaming, particularly Paigow Poker, through regulatory-compliant operations.
WSP is the first company to build a sustainable, profitable online gaming business that complies with all laws and
regulations of every Asian country in which it operates. The company is focused on building a complementary set of
gaming-related products and services that, collectively, will serve as an attractive, regulation-compliant foundation
for larger movers in the fast-developing Asian gaming space.
Founder/CEO of DateAsia
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Often referred to as "Chinese Poker", Paigow is the most widely played game in China, Japan, Taiwan, Korea and
other Asian countries with high levels of play in USA and Europe.
The opportunity in greater Asia is supported by significant trends:
Greater Asia is estimated to have 337 million internet users, a 235% compounded annual grown over the
last seven years.
There were 8 million Asian viewers in the sports and games category of StarTV in 2006.
1.4. Products
WSP is engaged in creation of internationally-branded content, online & offline games, entertainment, and
sponsorships. Specifically, the company is building a portfolio of 13 revenue-generating businesses centered on the
proliferation of online gaming in Asia. These businesses are grouped into several themes:
Online Gambling
Affiliate Licensing
Land-Based Events
The World Series of Paigow focuses on Asias most popular game in Paigow. WSP will use that game as an entry
point into the marketplace but look to expand its operations and offerings into other popular Asian games, including:
Pachinko ()
Fraud Prevention
Player Registration
Customer Authentication
Underground Gambling
Such precautions will enable The World Series of Paigow to attract large companies as strategic partners and
potential acquirers who seek 100% legal business models for their inevitable expansion into Asia.
$419,414
$164,115 TO $724,014
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2. COMPANY
2.1. Description of Business
The World Series of Paigow (WSP) is a U.S.-based gaming media company focused on expanding the popularity of
Asian gaming, particularly Paigow. The company owns and operates a high-stakes televised Paigow tour to serve
mainly as a publicity tool for WSPs online properties.
WSP is the first company to build a sustainable, profitable online gaming business that complies with all laws and
regulations of every Asian country in which it operates.
Online Gambling
Affiliate Licensing
Land-Based Events
In addition to Paigow, WSP will be offering online and offline products involving other major Asian games,
including Traktor Poker, Fight the Landlord, Pachinko, and Big Two.
Revenue Streams are discussed in more detail in Section 4: Companys Products.
Former Head of Backgammon and New Products at PartyGaming. (London Stock Exchange: PRTY)
Founder/CEO of DateAsia (Leading Asian online dating website) which raised over 20mm
Executive Producer of WPT multimedia programs and WPT Behind the Scenes.
Former Co-founder and CEO of ChipChamp Inc. (Leading online social network for poker players).
Acquired by PartyGaming in June 2006.
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Former Corporate Development Advisor for Apple Inc. (NYSE: AAPL) a former Fortune 500 technology
company with $6 billion in sales.
Sits on various boards including the Advisory Board Member of the Texas Gambling Control Commission,
California Problem Gambling Council as well as various Chinese charitable and benevolent associations.
Production costs
Marketing
Office
Legal
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The 1998 movie Rounders, starring Matt Damon and Edward Norton, introduced the American
movie-going audience to the then-underground world of Texas Holdem Poker.
Internet websites, including PartyGaming and PokerStars, offering real-money gaming, sprung up in
2000 and 2001, created a highly lucrative online revenue model.
The Travel Channel and ESPN began to televise Poker Advisors tournaments, offering viewers a new
insight into the game, including lipstick cameras displaying the unseen hole cards of players. In
2003, Chris Moneymaker, an amateur player from Texas, won a satellite internet tournament for a seat
at The World Series of Poker. He proceeded to win the tournaments flagship event and created an
explosive interest in amateur participation at big-money events. Poker became a cool game among a
younger crowd.
3.1.3. Online poker
Poker is one of the worlds most popular card games.
The strength of the internet as a gaming medium and the growth in the popularity of poker as a leisure pursuit
in international markets have delivered strong growth in both the number of people playing the game online
and the total amount of revenue captured by the operators.
According to PartyGaming, an estimated three million people worldwide were playing poker online in 2006.
GBGC estimates that approximately $3.1 billion of global gross gaming yield was generated from online
poker in 2006, more than double the $1.4 billion estimated to have been generated in 2004.
Excluding the US, GBGC estimates that the online poker segment will grow at a CAGR of over 14% between
2006 and 2010. 2
3.1.4. Asia-Pacific Gaming
In mainland China, WSPs largest target market, all forms of internet and casino gambling are illegal.
However, according to Richard Li, the Director of the Chinese development firm, Sino, the Mainland Chinese
gambling market turns over $100 billion, 95 percent illegally.
According to Datamonitor, Asia-Pacific alone generated $163 billion for the casino and gaming industry in
2006, which was equivalent to 53.3% of total global revenues.
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The Economist states that Macaus gambling receipts increased by 22% in 2006 placing it just ahead of the
Las Vegas strip, previously the global leader. The number of visitors to Macau has grown from 10 million in
2003 to 22m in 2006 and Goldman Sachs estimates the number will reach 45 million by 2009.
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Big Two Da Lao Er () is a shedding card game similar President, Crazy Eights, and Winner. It is
sometimes mistakenly called "Chinese poker" because of its Chinese origin and its use of poker hands, and
goes by many names, including Big Deuce, Deuces, Thirteen, Da Lao Er (Mandarin Chinese), Choh Dai Di,
Dai Di (both Cantonese), and Pusoy Dos (a variant of the game).
Popular in East Asia, where it originated, it is played both casually and as a gambling game. It is usually
played with two to four players, the entire deck being dealt out in either case (or sometimes with only 13 cards
per player). The object of the game is to be the first to get rid of all of your cards.
3.2.3. Asia as a Target Market
The movie God of Gamblers (1989) is ranked as the highest grossing movie in Hong Kong history - a
gaming oriented entertainment is the Hong Kong Titanic
Macau has replaced the Las Vegas strip in gross gaming revenues, and Asian gamblers are the highest
yielding players in Las Vegas.
China now has 23 million online game players. Recognizing these trends, in 2007, the Poker Advisors cut a
deal with China Leisure Sport Administrative Center to launch National China Poker League, and the
PokerStars Asia Pacific Poker Tour (PSAPPT) was launched.
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4. REGULATORY ENVIRONMENT
4.1. United States
In the United States, legalized online gambling is a complicated issue at the federal level. The SAFE Port Act
currently outlaws internet gambling, but a number of efforts have been made to redefine Paigow and other games as
skill games that might change their status related to online play.
4.1.1. SAFE Port Act & UIGEA
The Security and Accountability For Every Port Act of 2006 (or SAFE Port Act) was passed by the U.S.
Congress at midnight on October, 2006. The Act prohibits the transfer of funds from a financial institution to
an Internet gambling site, with the notable exceptions of fantasy sports, online lotteries, and horse/harness
racing.
The SAFE Port Act included the Internet Gambling Enforcement Act (UIGEA), resulting in a seismic shift in
the structure of the online gaming industry as well as an immediate and substantial impact on online pokers
business performance.
However, offline gambling continues to thrive in the United States and internationally, when buy-ins take
place on-site at casinos and card houses.
4.1.2. Companys plans to address
As a result of the UIGEA, online poker revenue has taken a significant hit, as providers have scrambled to
find other markets to address, and other forms of gaming to offer. In particular, gaming companies are looking
towards Asia.
To address the UIGEA and international (e.g. Chinese) restrictions on real-money gambling, The World
Series of Paigow will be a 100% legal business model. The World Series of Paigow strongly supports the
Internet Gambling Regulation and Enforcement Act of 2007 which designates Paigow as a legal skill game.
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Mobile gateways
Underground Gambling
The underground gaming industry has grown tremendously over the past years. The China Centre for Lottery
Studies at Beijing University estimates that in 2006, up to $77 billion was wagered on such overseas internet
betting sites, which equates to $59 per capita or $566 per Internet user.
WSP seeks to avoid any transactions or involvement in this sector.
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6 www.wptbootcamp.com
7 www.WSPacademy.com
8 See www.cardplayercruises.com and www.classicgamingcruises.com
Revised: 05/10/14, 11:18 PM
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6. MARKETING STRATEGY
6.1. Primary Initiatives
In contrast to a focus on sponsoring preexisting third-party events and properties, The World Series of Paigows
marketing plan centers around a vertical strategy of building proprietary assets and strategic partnerships, including:
WSP-branded high stakes televised tournaments. The company will have six Season One tour stops,
consisting of eight shows, developed in some of the worlds most reputable casinos in Season 1. Televised
tournaments will capture the excitement of Paigow with lipstick or hole cameras (showing the players hidden
tiles), educating players with brief tutorials, and player features. Shows will be licensed and distributed in key
territories around the world in an effort to convert viewers into online players.
Casino-hosted marketing partnerships. WSPs casino partners (those hosting Tour events) will be some of the
worlds largest and most reputable. Host casinos will hold annual events promoting The World Series of Paigow
and its brand to gaming enthusiasts. Marketing promotions will include, but are not limited to, banners and
branded paraphernalia, event information and ads on casinos websites, and casino newsletters and online &
offline advertising.
Branded licensed products. WSP will license its brands to create products for sale such as hats, shirts, DVDs,
collectibles, Paigow sets etc., which will be distributed in major retail outlets throughout the world.
WSP community. The World Series of Paigow is developing an online social community, along the lines of a
MySpace or Facebook, which will aggregate Paigow enthusiasts throughout the world and will grow virally via
an invite a friend feature. Users will sign up to read about, discuss, and blog the latest events, their favorite
WSP Paigow hands, and celebrity players. The site will have direct links to the WSP subscription-based site.9
Sponsor partnerships. Category-exclusive sponsors will be branded throughout the tour. Sponsorship will be
associated with myriad consumer products, such as The official beer of the MWT, or The exclusive airline of
the WSP. In addition to monetary payment, sponsors may be obligated to cross-market WSP products and
services on their labels and marketing materials.
Viral marketing. WSP will utilize content from its tour show and public relations campaigns to develop
numerous low-cost viral and guerilla marketing campaigns to be spread across leading sites with large user bases.
In addition, WSP is building various Paigow applications to be imbedded via APIs in existing online social
networks with large user bases, such as Facebook and OpenSocial.
Business Development Relationships. Asian sites such as Baidu.com, Sina.com, Netease.com, and Sohu.com
will be solicited for business development relationships with a cross-marketing focus to assist in taking WSP
products and services to a much larger audience.
Online- WSP will purchase various email lists from third parties and partner with various companies with
available inventory in order to describe the WSP websites offering.
Offline- WSP will rely primarily on its vertical strategy for off line marketing initiatives. However, when
appropriate, WSP will explore various print, event sponsorship, and direct mail initiatives.
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Affiliate- Affiliate marketing is one of the best mechanisms for acquiring new users and being able to scale
out quickly by incentivizing third-parties to drive traffic to WSPs online properties in return for a fee or
bounty. The company plans on developing WSPPartners.com, a self-service site where webmasters may
access banners ads and promotion codes. Their visitors who click on the banners or type in the codes will
be identified as having been referred by the affiliate.
WSP will also build an internal affiliate sales and management group whereby WSP sales professionals
will contact and recruit affiliates to promote the companies products as well as manage the day to day
needs of the affiliates.
Telemarketing- WSP plans to develop an in-house call center to promote customer acquisition and
retention. Sales professionals will contact prospective new users via phone, describe any promotional
offerings, and walk them through how they can register, deposit money and start playing. Additionally,
these professionals will monitor users play and incentivize inactive users with incentives to prompt them
to resume playing.
Press Conference: A formal press conference will be held at the start of the campaign to announce the event
to the public.
Press Releases: A series of worldwide press releases will be issued throughout the duration of the campaign
to all key target markets.
Media Center: A media center will be constructed on site, at the tournament venue and will be staffed by
WSP media professionals.
Region
China
Other Northern Asia
Taiwan
Malaysia
Singapore
Other Southeast Asia
Total, Asia
All
2.7
0.9
0.7
1.4
0.2
2.1
8.0
Male 15+
2.0
0.7
0.5
0.2
0.1
0.3
3.9
Source: StarTV
Notes: North Asia includes Macao; Other SE Asia includes Philippines, Thailand, Malaysia, Indonesia,
Brunei, PNG, New Caledonia, Vietnam and Guam.
10 See Appendix A for a list of countries defined as Greater China
Revised: 05/10/14, 11:18 PM
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Timeline
Jan
Sponsorship & Merchandise
All Season One sponsors signed
WSP Magazine partner signed
Online
Free Paigow software launch
Asian gambling social network launch
Mar
Apr
Q2 2008
May
Jun
Q3 2008
Aug
Sep
Oct
1st
1st
15th
31st
5th
16th
4th
8th
20th
15th
30th
Offline
Paigow boot camp partner signed
WSP cruise partner signed
Jul
15th
Financing
Series B closing (latest)
Tour
Season One tour stops secured
Event Stop 1
Event Stop 2
Event Stop 3
Event Stop 4
Event Stop 5
Event Stop 6
Q1 2008
Feb
1st
1st
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Q4 2008
Nov
Dec
DRAFT
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DRAFT
Software development and true understanding of Paigow and other Asian games
Online Gaming Regulation: There is uncertainty as to the legality of online gaming in most countries
throughout the world. While we intend to be 100% legally compliant there are unclear areas that if made
illegal will significantly affect our overall business.
Technology Risks: WSP sees online gaming as a major part of its future revenue stream. Any failure or
interruption of these systems could harm WSPs ability to operate its business. Cybercrime and hacking is a
constant threat to any internet-based business.
Competition: New businesses are continuously entering the nascent online/offline Asian gaming sector.
Short Operating History: WSP has a short operating history in a new marketplace. Our success is based
upon the continued popularity of online gaming in general, and Paigow in particular.
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DRAFT
9. FINANCIAL OVERVIEW
The World Series of Paigow derives its valuation from two sources: a discounted cash flow based on company
financials, and price-to-earnings ratios of similar companies in the same industry (i.e. comps).
Three relevant industry comps and their top-line financials are as follows:
Party Gaming
Playtech
MegaMedia
Perfect World
Stock Market
LSE
AIM
NASDAQ
NASDAQ
DCF Valuation
P/E x FY 1
31.2
25.2
33.6
49.7
P/E x FY 2
16.0
17.3
22.6
24.1
$419,414
Year Used in Earnings
31
25
34
50
$145,359
$390,506
$641,269
$117,225
$314,924
$517,153
$159,426
$428,297
$703,328
$234,449
$629,848
$1,034,305
$164,115
$440,894
Source: Bloomberg
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$724,014
DRAFT
Penetration
Internet Users
Internet Users
User Growth
2007 (est.)
(% population)
2000
2007
( 2000-2007)
Greater China
China
Singapore
Hong Kong
Macao
Taiwan
1,317,431,495
12%
22,500,000
162,000,000
620%
3,654,103
66%
1,200,000
2,421,800
102%
7,150,254
68%
2,283,000
4,878,713
114%
500,631
40%
60,000
201,000
235%
23,001,442
63%
6,260,000
14,500,000
132%
1,351,737,925
14%
32,303,000
184,001,513
470%
Japan
Korea, South
Philippines
Vietnam
128,646,345
68%
47,080,000
87,540,000
86%
51,300,989
67%
19,040,000
34,120,000
79%
87,236,532
16%
2,000,000
14,000,000
600%
85,031,436
20%
200,000
17,220,812
8510%
352,215,302
43%
68,320,000
152,880,812
124%
1,703,953,227
20%
100,623,000
336,882,325
235%
Other Asia
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DRAFT
Land Based
Online
Opportunities
Mainland China
Not Allowed
Not Allowed
Singapore
Pari-mutuel
Horseracing
Controversial
Taiwan
Not Allowed
Not Allowed
Macao
Regulated
Not Allowed
(Not addressed by law)
Hong Kong
Pari-mutuel
Horseracing
Paigow parlors
Not Allowed
Philippines
South Korea
Not Allowed
Japan
Not Allowed
Vietnam
Not Allowed
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DRAFT
Advertising Exposure: The casino partners name/logo will be included in all tournament advertising and
promotional campaigns conducted by The World Series of Paigow.
2.
Promotional Rights: $20,000 (Value)- The official casino partners will have the right to conduct preapproved promotional programs utilizing The World Series of Paigows name and logo, and all such
programs will be promoted on the tournament website, publications, and in all related tournament
advertisements and press activities.
3.
Public Relations: $20,000- The sponsors name and logo will be used in the tournament PR campaign. No
less than 3 press releases will be issued throughout the campaign, and formal press activities will be
conducted on-site, during the tournament.
4.
Print Materials: $15,000- The sponsors name and logo will be included in all event print materials,
including advertisements, posters, brochures, badges and etc.
5.
6.
7.
8.
9.
10. Television: $40,000- The sponsor will receive extensive coverage during the television broadcasts and a
full 2 minute casino feature in each of 2 episodes.
11. VIP Tournament Invitations: $12,500- The official casino partner will receive five (5) VIP invitations to
the WSP Invitational (Celebrity Event) to be used for promotional purposes, or as the venue sees fit to use
them. Estimated value is $2,500 per seat.
12. Internet and Website: $40,000- The official casino partners name and logo will be used extensively year
round on the tournaments official website, and in all internet promotions and advertising including emails,
website banners, and logo exposure.
$20,000
Public Relations:
$20,000
Public Relations:
$20,000
Print Materials:
$15,000
Venue Branding:
$50,000
Television:
$40,000
$12,500
$40,000
$217,500
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