PartyGaming Posts Record Gain Despite U.S. ban

Aug 31, 2007

Author: Catalina Munoz

Shares of the world's biggest Internet poker company, PartyGaming, beating analysts' estimates, rose the most ever in London trading after publication of first-half profit estimates.

The company, based in Gibraltar, said Wednesday the earnings before interest, tax, depreciation and amortization increased 29 percent to $36.9 million outside the United States.

After the passage of a law in the US last year, which aimed at barring offshore gambling Web sites from the country, PartyGaming (owner of Party Poker) sales were wiped out.

Richard Carter, an analyst at Numis Securities in London who has a "buy" rating on PartyGaming said:" These results provide a bit of reassurance to the market," "Current trading has held up relatively well". He had estimated earnings outside the United States at $33.8 million.

In order to rebuild its customer base and advertise casino games, the company has increased investment outside the United States. First-half sales from continuing operations gained 42 percent. Gross revenue averaged $1.4 million a day in the first eight weeks of the second half; a performance the company said had met managers' expectations.

PartyGaming shares gained 5.25 pence, or 23.8 percent, to reach 28 pence on Wednesday.

Mitch Garber, chief executive of PartyGaming said on a conference call PartyGaming will open an office in Asia in the next week. Garber said: "We know it's a complicated environment, but we believe the future in Asia is going to be very bright."