Online Poker

PartyGaming Stocks Fall Due to Slowdown in Poker

by Poker Team

PartyGaming has reported that the number of people playing poker at its site has dropped in the last two months, prompting concerns about its first half results and bringing downgrades to earnings forecasts.  PartyGaming, which owns the poker website PartyPoker, said Friday that trading since June 30 has matched management’s expectations though poker has continued to be softer than expected.  PartyGaming reported average gross daily revenue was $1.6 million per day and the average active poker players totalling 50,800 per day in the eight weeks to August 25.

Chief Executive Jim Ryan, who joined the company at the end of June, said the poker business is being held back by competition from sites that accept players from the United States.

Ryan said, “This represents a continuing competitive threat to listed businesses like PartyGaming that immediately stopped customers in the U.S. from playing or making deposits on any of the group’s real money sites following the enactment of the UIGEA (Unlawful Internet Gambling Enforcement Act),”

PartyGaming is continuing discussions with the DOJ, hoping to secure a deal ending the threat of prosecution for taking Internet wagers in the US prior to the UIGEA being enforced in October 2006.  The company is setting its sites on a successful resolution with the DOJ this year though they admit, the resolution of the talks is outside of their control.  The new non-executive Chairman, Rod Perry, is overseeing the talks.

“To bring continuity to the DoJ discussions Rod Perry, our newly-appointed chairman, will be taking over the day-to-day management of the DoJ process freeing me up and allowing me to focus my efforts on daily operations,” Ryan added.

Dissatisfaction with the current trading levels led to some brokers downgrading their earnings forecasts for the company, sending its shares .6% lower.  Dresdner Kleinwort downgraded its 2008 forecast by 5 percent and its revenue estimate by 4 percent though it kept a ‘buy’ recommendation, emphasizing future prospects for sector consolidation.

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