PARTYGAMING

LONDON (Reuters) - Thanks to the Internet and television, poker exploded outside its U.S. homeland in 2005, and PartyGaming Chief Executive Richard Segal sees technology boosting that boom further in 2006.

Internet poker took a firm hold in 2005, sparking three big London stock market flotations, generating revenues of around $3.5 billion (2 billion pounds) and launching games and books that are now topping Christmas lists around Europe.

PartyGaming (PRTY.L: Quote, Profile, Research) takes about half of that $3.5 billion pot, and it has big plans for further growth. The company is assessing acquisitions and everything from mobile phones to interactive television to access more players.

"The beauty of it all is that we've invented nothing new," Segal told Reuters in a recent interview at PartyGaming's London headquarters. "We're just taking games that have been around for decades and putting them in people's homes."

After a high-profile 4.6 billion-pound flotation in June, the owner of PartyPoker and Starluck Casino saw its market value soar to over 7 billion pounds.

Cautious words in a September trading statement sent its shares into a dizzying fall, from which it has finally recovered by taking a more aggressive stance against its competitors.

Next year, PartyGaming plans to launch its new PartyCasino site to run alongside its existing Starluck Casino, as well as two new games.

GOING MULTILINGUAL

"There will be two new products next year," said Segal. "In the first half there will be a person-to-person skill game and in the second half there will be another more akin to casino."

PartyGaming will also launch a "shared purse", which will help players switch from game to game.

"If you want to go from playing on Starluck Casino to PartyPoker, it's currently the equivalent of going from eBay to Amazon," said Segal. "It's not just one click away, but that will change."

Apart from making life easier for players, the shared purse will make it easier for PartyGaming to cross-sell its various games to them.

PartyGaming gets 80 percent of its revenues from the United States, where poker inhabits a grey area on the fringes of legality. But in the second half of 2006, PartyGaming plans to launch its games in six new currencies and languages.

"From an investor's point of view, it will do us well to reduce our dependence on the United States market," said Segal.

But he sees problems in Asian expansion with the regulatory environment, low penetration of broadband Internet and credit cards and with fraud. "I think Asia is more medium-term than short-term," he said.

BUSTED FLUSH

Although casino games and sports betting are transferring to mobile phones successfully, poker is proving problematic because the games can take longer, during which time mobile signals can fail.

"A sports bet is very easy to place -- it's just one text each way.," said Segal. "But imagine you're playing poker and have a royal flush in your hand, and then you lose connectivity ... We don't want disgruntled customers.

"It's early days, and we're still looking at test results, but the indications are not getting us over excited about mobiles," he added.

Digital television, by contrast, is proving a promising medium on which players might soon interact.

"The more distribution channels customers have to play on, the better," said Segal. "And interactive television is something we're looking at seriously."

PartyGaming has been criticised by some analysts for being too poker-focused and lacking the opportunities for cross-selling of more diverse companies like Sportingbet (SBT.L: Quote, Profile, Research), which has both sports betting and poker.

"We think cross-selling is important, but we're not obsessing about whether one of those products is sports betting," said Segal.

Asked whether PartyGaming was looking to buy a sports betting operation, he said they were not interested in acquiring companies that took sports bets from the United States, but they would consider opportunities elsewhere.

"In an average week, I get one knock on the door, and in a busy week, three. But that's excluding the banks trying to make deals happen," he added.



© Reuters 2005. All Rights Reserved.

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