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PartyGaming "stabilized" after UIGEA

PartyGaming generated almost $26 million over the last four weeks, according to a pre-close trading update announced Thursday. The online gaming giant, which closed its U.S. facing operations and laid off 945 people after the Unlawful Internet Gambling Act became law in October, says it will not reveal fourth quarter key performance indicators and will instead wait until March to reveal a further results statement.

"(Passage of the UIGEA) was a blow to our business for sure, but one thing that I am very pleased to say is that our group has absorbed and now recovered from this incident," CEO Mitch Garber told a conference call Thursday morning.

"PartyGaming is no longer a poker-led, U.S.-dependent and one language gaming operator," he added. "We are rapidly becoming a multi-lingual and multi-currency non-U.S. company."

Crunching the numbers

Following passage of the UIGEA, daily poker revenues reached a low of $637,000 per day, but they have since recovered to an average of $721,000 per day, PartyGaming reported.

The company also announced that over the last four weeks, it has served an average of approximately 52,000 players per day who have contributed an average gross revenue of approximately $921,000 per day across all of its gaming operations. These figures do not include results from PartyGaming's new sports betting operations.

In the third quarter, the company's non-U.S.-facing operations generated an average daily revenue of $965,281 and served an average of 44,159 players per day. PartyGaming says even though they've increased the number of non-U.S. players they serve, revenue dropped because some of its higher-raking players have left the network to play with privately owned companies that continue to offer games to U.S. customers.

When contributions from U.S. players are included in results for the third quarter-- the final quarter in which a full three months of U.S. play was taken-- the figures stand at 159,711 average daily players who contributed an average of $3.6 million per day.

Growing the business

Garber told the conference call that his company's appetite for mergers and acquisitions has not diminished. "We will continue to pursue deals that are accretive and can add either management or product expertise to any of our operational lines, and we will be pushing further into new territories as a main and key objective of M & A and in our organic business plan," he said.

PartyGaming soft-launched its PartyBets.com sports betting operation in late November and is now progressively marketing it to its poker and casino customers.

Virtual racing was also added to the company's casino offering in late November, and PartyBingo.com was formally launched in the U.K. earlier this month. The first multi-lingual version of PartyPoker.com was launched in German on November 21 and further language and currency versions are set to roll out in 2007.

The company says that "EMEA", or Europe, Middle East and Africa, is now its most important market, representing approximately 80 percent of total new player sign-ups and 67 percent of total gross daily revenue. The Americas, which includes Canada, Latin America and South America, account for approximately 15 percent of total new player sign-ups and 27 percent of total gross daily revenue.

Garber hinted that more creative marketing could soon be coming from his company. "We're looking at viral marketing as well. We see that the Youtube's of the world are creating an incredible amount of views and we're looking at ways to capitalize on that new phenomenon. We're also developing some of our own content to be broadcast on our website as part of a new community that we're building inside Party.

"I guess essentially (our advertising) is going to be very geography specific," he added. "Some geographies don't allow television commercials, some geographies don't allow gaming advertising, some geographies only allow online advertising, so broadly speaking we have new creative, we have product specific creative. I think we have some very good affiliate programs that we're rolling out in the New Year, and that's our strategy for 2007."

Garber also said that Las Vegas Sands' entrance into the online gaming market was a positive sign for his company's business. "Clearly they are setting themselves up for a large online presence in the future, and if I had to guess, I would guess that they also see their presence in Macau and soon in Singapore as a launching pad to have a strong Asian Internet presence as well," he said. "Clearly there are opportunities in markets that have yet to be tapped, and I think Las Vegas Sands is probably thinking about that, and I think that quite frankly we'll get there first."

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