Casino users boost Partygaming profits - Friday 29th of 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.
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