Gaming shares have not proved the best bet over the past year after the dramatic crackdown on internet gambling in the US plunged the industry into chaos.
Before the Unlawful Internet Gaming Enforcement Act became law in October, tagged onto the end of a port security bill, PartyGaming derived 73 per cent of its revenues in the US. Since then it has been forced to pull out of the world's most lucrative gaming market and lost its place in the FTSE 100 Index. It was also hit by the defection of some of its bigger gamblers to poker websites that have been ignoring the ban.
Operations have been streamlined with the loss of 945 jobs across the Gibraltar-based group leaving a staff of 1,250.
However, PartyGaming has worked hard to bolster its operations in the rest of the world and its most important markets are now Europe, the Middle East and Africa. They now account for 80 per cent of new player sign-ups and 67 per cent of daily gross revenue. PartyGaming is also hoping to benefit from the growth markets of Russia and China, potentially via a joint-venture.
In an upbeat trading statement delivered yesterday, PartyGaming said revenues had stabilised quickly following the US crackdown.
Gross daily poker revenues are averaging $721,000, having hit a low of $637,000 after the Act was passed. Excluding sports betting, gross daily revenue in the four weeks to December 11 averaged approximately $921,000 per day and overall player volumes have averaged around 52,000 active players. PartyGaming said the loss of higher-ranking players had been offset by strong levels of sign-ups.
Also on the plus side, the group has signalled that consolidation is on the cards and said it had been approached by a number of companies keen for a tie-up. PartyGaming is back at the table. Hold.
China and Russia could make up for the US loss within 3 years imho..
