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  • PartyGaming Falls on Slowdown in Poker, Casino Sales

    (Update2)

    By Louisa Nesbitt

    Aug. 29 (Bloomberg) -- PartyGaming Plc, the owner of the PartyPoker.com Web site, slid in London trading after the company said online poker and casino sales fell in the last four weeks.

    The poker unit had average gross daily revenue of $815,400 in the four weeks ended Aug. 25, down from $855,300 in the prior four weeks, the Gibraltar-based company said today. Average daily casino revenue fell 12 percent in August, from July.

    PartyGaming declined 2 percent in London. The company said it is still facing competition from rivals that accept wagers from the U.S., where online betting was outlawed in 2006. PartyGaming also reported a first-half profit as gamblers staked money on new games, and costs linked to employee share option payments fell.

    ``The sharp fall in August casino revenues raises concerns about the business,'' Evolution Securities analyst Ivor Jones said in a note. Evolution has a ``buy'' rating on the stock.

    PartyGaming slid 4.25 pence to 209.25 pence. The stock has fallen 28 percent this year, compared with a gain of 4.4 percent by rival 888 Holdings Plc, owner of the Pacific Poker brand.

    ``Trading since June 30 has been in line with management's expectations, except for poker which continues to be slightly softer than expected,'' PartyGaming said in the statement.

    PartyPoker Changes

    Chief Executive Officer Jim Ryan said the company is still ``confident'' about its prospects and plans to make changes to the PartyPoker Web site, declining to give any details.

    First-half net income was $22.7 million, or 5.3 cents a share, compared with a loss of $50.6 million, or 12.3 cents, a year earlier, the company said. Revenue from continuing operations advanced 17 percent to $254.8 million.

    This year's introduction of Web slot machines under the ``Mission: Impossible'' and ``Saturday Night Fever'' brands helped to spur spending on casino games in the first half. Casino revenue jumped 38 percent in the six months, while sales from poker, the main contributor, advanced 6.4 percent. Revenue at the sports-betting unit rose 36 percent.

    888 said yesterday that first-half profit rose 40 percent, boosted by new games, while net gaming revenue gained 36 percent.

    European online-wagering companies exited the U.S., their main market, in 2006 after industry executives were arrested in a crackdown by the U.S. government on offshore Internet betting.

    Acquisition Plans

    PartyGaming jumped on May 30 on speculation the company may have reached a settlement with the U.S. Department of Justice regarding past U.S. activities. Talks with the department started in June 2007 as industry concern spread about possible legal action against companies that took bets from Americans before the 2006 law barred foreign betting Web sites.

    ``We continue to believe removing this uncertainty will give more growth opportunities,'' Ryan, who took over the position on June 30, told journalists on a conference call. The company is looking at ``a couple'' of acquisition opportunities in Europe, though nothing is at an advanced stage, he said.

    Separately, PartyGaming said today that Rod Perry took over from Michael Jackson as non-executive chairman.

    To contact the reporter on this story: Louisa Nesbitt in Dublin at [email protected].

    Last Updated: August 29, 2008 11:46 EDT

  • #2
    Casino users boost Partygaming profits

    By Hugo Fildes
    Friday, 29 August 2008

    PartyGaming, the online gaming company, showed that it still had a strong hand at the internet gambling table, despite losing 75 per cent of its market less than two years ago.






    Although the Unlawful Internet Gambling Enforcement Act (UIGEA) of October 2006 shut Party out of its lucrative US market by effectively making online gambling illegal in America, the company posted positive results today.


    Overall revenue is up by 17 per cent to $254.8m, while underlying profits climbed 76 per cent to $64.9m. A dramatic rise in online casino users led to a 38 per cent rise in revenue in that sector.


    Since October 2006, when Party lost its US market overnight, the company has re-focussed its efforts on making itself an international company.


    “This has been an evolution rather than a revolution, but the transformation is not yet complete,” a Party spokesperson said today.


    “The online gaming market is still growing. Not at the exponential rate that it was, but it is still growing and it is a far more competitive landscape than before, especially in Europe.”


    The results come at a time when Party remains in dispute with the US Department of Justice, who are arguing that online gambling was illegal even prior to UIGEA, due to the 1961 Wire Act that prohibited paying for betting by using cheques or credit cards.


    While not appearing to affect the company’s results, the dispute is affecting their efforts to consolidate the market through mergers and acquisitions, as potential partners remain wary of doing deals with a company that has question marks over its legal position.


    “Consolidation is still to occur in the online gaming industry, and there are deals to be had, but these will only start once the Department of Justice issue is sorted out,” Party said.


    Discussions have been taking place since June 2007, yet no result seems forthcoming, with Party stating today that “obtaining a resolution is a board priority.”


    The issue, which has already played a part in the departure of former chief executive Mitch Garber in March of this year, today prompted another reshuffle at the top of the company.


    Rod Perry has been appointed Non-Executive Chairman and will be responsible for reaching a settlement with the Department of Justice.


    Jim Ryan, who replaced Mr Garber as chief executive in March, will now focus on the day-to-day running of the company who are re-launching their poker franchise later this year.

    Shares in Partygaming fell 2 per cent to 209.25p.

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