Poker flattens Party´s Q3

11/19/2008

Declining online poker revenues have moderated growing casino, bingo and sportsbetting results at Internet gambling group Party Gaming plc, producing an overall flat third quarter, the company reported this week. The poor performance on the poker front included a 12 percent decline in player sign ups during the quarter as revenues slumped to $65 million.

PartyGaming reported largely unchanged quarterly revenues due to a 15 percent decline in poker and said the challenging economic environment and strengthening US dollar continue to affect its revenue performance.

Total revenue came to $117.7 million in the three month ended 30 September from GBP 118 million in the comparable quarter last year, as the 15 percent decline in poker revenue offset the otherwise satisfactory 25, 19 and 143 percent growth respectively in casino, sports betting and bingo.

Looking at the detail, casino revenue in the quarter reached $45.9 million, with nine month revenue up 33 percent to $135.8 million. Sports betting revenue was up 19 percent to $5.1 million, mainly thanks to live betting operations, with nine months numbers also up, by 29 percent to $14.1 million. Bingo activities showed solid UK growth with an increase of 143 percent in revenues to $1.7 million, and nine months revenue up 106 percent to $3.7 million.

Income for the nine month period rose 11 percent to $372.5 million (2007: $335.4 million). Nine month revenue for poker was down 1 percent to $218.9 million.

In the current quarter, the six weeks ended November 11 saw average gross daily revenue falling by 7 percent from that achieved in the third quarter to $1 492 000. New poker player sign-ups averaged 1 220 per day and there were on average 57 950 active poker players per day.

“The substantial appreciation of the US dollar has adversely impacted our revenues but has had a corresponding benefit on our costs, most of which are incurred in Euros and Sterling,” said chief executive Jim Ryan. “We have continued to generate good cashflow in the period and retain a strong balance sheet. The board remains confident of delivering full year Clean EBITDA in line with our expectations,” he added.

Ryan said that the company is working on addressing the poker-related issues by looking to merge with another poker network or operator.

City analysts agreed, saying that Party needs to merge its poker room with a competitor.

The firm’s cash reserves are sufficient to absorb any financial penalties contemplated by the US authorities in the wake of Party's reported recent negotiations with the Department of Justice, analysts predicted.