PartyGaming Falls on Slowdown in Poker, Casino Sales

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 as much as 8.1 percent in London, the steepest percentage drop since July 16. 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 as much as 17.25 pence to 196.25 pence. The stock traded at 208 pence as of 10:15 a.m. local time and has fallen 28 percent this year, compared with a gain of 4.6 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.

News Added: 29 August, 2008

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