PartyGaming earnings down slightly

Party Gaming, parent company of Party Poker, gave its stockholders a sneak peek into its finances the other day.  According to a press release issued on July 8th  gross revenues have fallen slightly since late April due to seasonality and competition for players’ leisure time from the Euro 2008 football tournament. Party’s casino business has continued to perform strongly but this was offset by a weaker than expected performance in poker and sports betting with overall revenues slightly lower than expected. However, operational efficiencies and lower marketing costs mean that Clean EBITDA margins in the first half are expected to be substantially higher than in the comparable period in 2007.  The strong performance in casino has been driven by an increase in the number of players and cross selling from poker. Since their launch in May, two new branded slot machines, “Mission: Impossible” and “Saturday Night Fever”, have proved particularly popular and bingo is now starting to gain traction in the UK following the launch of Bingo Night Live on British television channel ITV1.  In poker, despite making the new loyalty scheme more generous to PartyPoker VIPs, the cost of PartyPoints had been reduced to previous levels by the end of the second quarter, with the full benefit expected to be realized in the second half of the year. However, strong competition, particularly from poker sites that continue to accept US players (amongst them Pokerstars and Full Tilt Poker), has led to an increase in bonuses and costs associated with some of their poker tournaments in the period.  In sports betting, Euro 2008 saw a marked increase in betting volume, but a poor run of results at the start of the tournament impacted the gross win margin.  The full year result will be impacted by a $4,000,000 one-off charge associated with the replacement of former Chief Executive Officer Mitch Garber that has been incurred in the first half. However, a number of new initiatives in poker, the addition of further branded slot machines during the second half and continued progress on UK bingo lead the Board to remain confident about the Group’s prospects for the full year.  The Group’s interim results will be announced on 29 August 2008.