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Dispelling some of the disquiet over U.S. moves against online gambling, Party Gaming's top priority is extending non-US business.
Growth in non-U.S. custom has strengthened confidence in Party Gaming, which announced positive results as a turbulent week closed, due mainly to the ongoing BetonSports affair in the USA (see previous InfoPowa reports).
PartyGaming Plc spokesmen said second-quarter sales increased 49 percent as it attracted more customers from outside the U.S., where the government is trying to crack down on Internet gambling.
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Revenue rose to $319.3 million from $214.8 million a year earlier, the Gibraltar-based company said in a statement, revealing that it plans to expand into other regions including Asia to further reduce its reliance on the U.S.
Almost half of new poker players signed up in the quarter were located outside the USA. Some 73 percent of Partygaming's revenue still comes from the US, although the firm says almost half its 232 446 real-money poker signups came from elsewhere.
Shares of Web gambling companies including PartyGaming plunged in this week's first two days as U.S. prosecutors indicted online bookmaker Betonsports Plc and ordered the company to stop accepting wagers from the country, its main market. PartyGaming, which introduced backgammon last month, achieved 76 percent of second-quarter sales through U.S. gamblers.
"In the midst of this turmoil, Partygaming is accelerating its strategy to become less reliant on US income - already this figure has reduced to 73 percent of total income, as opposed to 90 percent at the time of its initial float last year, " said Richard Hunter, analyst with Hargreaves Lansdown Stockbrokers.
Bloomberg's quoted Charles Hall, an analyst at Panmure Gordon in London: "These numbers should provide some reassurance about the continuing growth of the industry,'' he said in releasing a "buy'' recommendation on the stock. Share prices won't stabilise, though, until there's "greater clarity'' about the U.S. legal situation, he said.
The stock rose 5.2 percent in London Friday on the back of the results after weakening throughout most of the week in reaction to the BetonSports affair. It has fallen 16 percent this week, reducing the company's market value to about GBP 3.6 billion ($6.5 billion).
The U.S. government views online gambling as illegal under a 1961 law against using telephone lines to place interstate bets. Betonsports was indicted a week after the U.S. House of Representatives approved a bill that would criminalise payment collection for Web casinos and make financial institutions help law enforcement shut down fund transfers to illegal gaming sites.
"My view of our business hasn't been changed at all by the indictment of Betonsports,'' PartyGaming CEO Mitch Garber told Bloombergs on a conference call. "PartyGaming is very different to Betonsports.''
The portion of sales coming from outside the U.S. may rise to around 50 percent in "two to three years'' excluding mergers and acquisitions, Finance Director Martin Weigold told journalists.
Growth outside the U.S. is "among my top priorities,'' Garber said. "Asia is just one place we are looking to expand into. If you want to be a global brand, you have to be in the biggest markets of the world.''
He cautioned, though, that PartyGaming probably will have to adapt its games to comply with local gambling laws in Asia. ``We are not just going to storm in and offer poker and casino the way we operate elsewhere if that's not legal to do so in China, for example,'' Garber said.
Second-quarter sales growth slowed from 54 percent in the prior three months and 63 percent for all of 2005. Second- quarter sales from casino games jumped almost sixfold to $76.1 million, or about a quarter of total revenue.
PartyGaming replaced a $200 million loan facility with a $500 million credit arrangement, the statement shows. The company cited "attractive opportunities'' to expand in Europe and South America, without being more specific.
The company introduced blackjack in October and the PartyCasino Web site earlier this year, and it added bingo this (July) month. PartyGaming inaugurated its first foreign-language Web sites in the first quarter and now offers PartyPoker in languages including French and German. It plans additions such as sportsbetting....but only for gamblers outside the U.S.
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