The Guardian reports that Party Gaming shares plunged a further 13 percent Monday after analysts suggested its exit from the US on Friday in the face of new anti-online gambling legislation may have wiped up to 90 percent off revenues from the online operator’s PartyPoker business at a stroke.
Investor fears of a collapse in player numbers and liquidity on PartyPoker.com were exacerbated by the group’s decision to remove from the site a ticker informing visitors of the number of virtual tables in use and the number of players currently online.
Comparing Saturday night’s poker traffic with a week earlier, Ivor Jones, of Panmure Gordon, said: “Our very tentative estimate would be that rake and tournament fees would have been down more than 80 percent … real money play appears to have picked up sharply at the poker sites which have said they intend to continue to operate in the US.”
PokerStars, the Israeli-owned private company that has signalled its intention to continue in the US, has begun an aggressive recruitment campaign to capitalise on the exodus of rivals. In an almost unprecedented promotion, it is offering to double cash in new players’ accounts when they sign up. If it has not done so already, the Isle of Man-licensed PokerStars is shortly expected to overtake PartyGaming as the the world’s largest poker operator.
Over the weekend, the site hosted a record number of players in its regular tournament action (see earlier report).
A spokesman for PartyGaming, which until Friday generated three-quarters of revenues in the US, said the player and table number tickers had been removed because it did not want rival operators to use this information against it.
“We have taken the counters down temporarily. We are not going to give it on a plate to our competitors.” He warned against extrapolating a longer trend from week-on-week comparisons on player numbers.
The management is expected to give its view when PartyGaming reports its third-quarter numbers later this week.
Julian Easthope, a UBS analyst, said: “Liquidity drives revenues and Party will likely lose its market lead position.” Retaining small players is vital to attract big-pot regulars. Operators typically generate 70 percent of revenues from just 30 percent of players.
PartyGaming shares fell 4.5p yesterday to 30p – a quarter of the flotation price. Yesterday, PartyGaming had a market capitalisation of GBP 1.2 billion.