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UIGEA to cost PartyGaming $1 billion in 2007

20 October 2006

PartyGaming's investment bank expects the company's revenues to drop by more than $1 billion next year as a result of the industry giant's decision to pull out of the U.S. market after the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA).

Dresdner Kleinwort downgraded 2007 revenue projections from $1.513 billion to $450 million in financial reports released Friday. The bank also reduced 2006 revenue forecasts from $1.344 billion to $1.134 billion.

PartyGaming's report did show some good news. Third-quarter revenue grew by six percent to $337.2 million. But this reporting period does not include the days following the passage of the UIGEA.

The company will also suffer a one-time restructuring charge of $250 million in 2006 as a result of leaving the U.S. market.

"The impact of the recently passed legislation in the U.S. has changed the shape of our business fundamentally," said PartyGaming's CEO Mitch Garber.

The company logged 1,024,204 active players during the third quarter. But 824,556 of those players were based in the U.S. and are now cut off from the company. Its non-U.S. business has been surging lately, with overall group revenue growing by 21 percent to $92 million in the quarter.But since shutting Americans out from its real money sites one week ago, average daily gross revenue for the non-U.S. facing business has been 2 percent below the third quarter average.

PartyGaming has removed tickers from its PartyPoker network that show the number of active players and tables. A PartyGaming spokesperson told the Guardian this was done so that rivals like PokerStars could not use the reduced numbers against it.

"In the very near term, PokerStars can be an issue," Garber told a conference call. "But the playing field is going to become much more level. Most of the banks and processors are set to leave the industry."

The company stresses that it remains well-positioned to succeed in global endeavors. "We continue to grow what is already a substantial business outside of the United States," said Garber to the conference call. "PartyGaming is very much open for business for customers around the world. We do have the world's largest non-U.S. poker site by a large margin."

"We continue to look at several merger and acquisition opportunities as well as pursue talks with new strategic partners," he added.

UIGEA to cost PartyGaming $1 billion in 2007 is republished from Online.CasinoCity.com.
Bradley Vallerius

Bradley P. Vallerius, JD manages For the Bettor Good, a comprehensive resource for information related to Internet gaming policy in the U.S. federal and state governments. For the Bettor Good provides official government documents, jurisdiction updates, policy analysis, and many other helpful research materials.

Bradley has been researching and writing about the business and law of internet gaming since 2003. His work has covered all aspects of the industry, including technology, finance, advertising, taxation, poker, betting exchanges, and laws and regulations around the world.

Bradley Vallerius Websites:

www.FortheBettorGood.com
Bradley Vallerius
Bradley P. Vallerius, JD manages For the Bettor Good, a comprehensive resource for information related to Internet gaming policy in the U.S. federal and state governments. For the Bettor Good provides official government documents, jurisdiction updates, policy analysis, and many other helpful research materials.

Bradley has been researching and writing about the business and law of internet gaming since 2003. His work has covered all aspects of the industry, including technology, finance, advertising, taxation, poker, betting exchanges, and laws and regulations around the world.

Bradley Vallerius Websites:

www.FortheBettorGood.com