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Talks with US authorities continue
Party Gaming's first half results were released this week, bringing some respite from a record low share price but in line with previously lowered expectations. The London listed company said it was continuing talks with U.S. authorities following a crackdown on gambling last year.
Arguably the world's biggest online poker firm whose websites include PartyPoker and PartyCasino, the company posted earnings before interest tax, depreciation and amortisation (EBITDA) from continuing operations of $36.9 million in the six months to June 30. Adjusted for the loss of U.S. operations, pretax profit from continuing operations rose 29 percent to $36.9 million, topping analyst forecasts helped by strong growth from its online casino operations.
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The full impact of its withdrawal from the United States last year became evident. It made a pretax loss of $32 million from revenue of $212.5 million, its accounts revealed.
"We had voluntarily approached the (U.S.) Department of Justice and we are working toward satisfactory resolution ... We continue to move along toward hopefully what will be considered by all a satisfactory resolution," Chief Executive Mitch Garber told a conference call.
In June the company said it had been in talks with U.S. authorities, as it seeks to find out whether it could face prosecution for taking bets in the world's largest gaming market before last year's passage of the Unlawful Internet Gambling Enforcement Act, which forbids financial transactions with online gambling companies.
The Party Gaming statement said trading in the second half had been in line with its expectations, with gross revenues averaging $1.4 million per day in the eight weeks to August 26.
Shares in the group climbed 5.5 percent to 24 pence in London, having gained as much as 7.7 percent in early trading. The bounce came after the stock hit an all-time low of 22 pence on Tuesday. Shares in the group peaked at around 180 pence shortly after its June 2005 debut, but tumbled along with the rest of the sector when the U.S. introduced the Unlawful Internet Gaming Enforcement Act, which prohibited banks from dealing with online gambling companies.
A positive in the report was a sharp rise in new customers - the total number of new non-U.S. customers playing with real money jumped 83 percent to around 404 000.
The group reported a loss of $50.6 million, after a profit of $298.1 million in the corresponding period of 2006. Revenue for the latest period fell 68 percent to $212.5 million.
The company highlighted the �spectacular� growth of its casino operations, which revealed a 218 percent rise in net casino revenue compared with 2006, and said that even allowing for first-time contributions from Empire Online and Intercontinental Online Gaming since January 2007, casino revenues now made up 30 percent of the group�s total revenues, compared with 14 percent in 2006.
Poker revenue for the six month period to the end of June was US$140.5 million, compared with US$129.5 million in 2006, casino revenue came to US$64.6 million, compared with US$20.3 million in the same period last year, while sports betting, including the maiden contributions of Gamebookers and PartyBets, brought in US$6.5 million in the first six months of the year.
The company said it had lost ground to competitors that continued to take US bets in the second quarter of the year but that this was expected. As a result, its flagship PartyPoker site now made up 12 percent of the global online poker market, compared with 15.4 percent in February 2007.
Hinting at good news to come, the report stated: "Over the coming weeks and months we expect to announce a number of further important business alliances with leading companies around the world that will help us to promote and grow our business."
Going into the third quarter, average gross daily revenue slipped 1 percent in August to around $1.4 million, though the group attributed this to it being the peak month for European holidays. "While the important fourth quarter lies ahead, the board remains confident about the group's prospects for the full year," Party Gaming said.
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