PartyPoker Revenue Drops Again

PartyGaming announced that revenue from their poker properties – namely, PartyPoker – is expected to drop between 11 and 13 percent in the second quarter of 2010 when compared to the first quarter of the year. The main cause is a drop in the number of players on PartyPoker and related sites; the average number of players per day is expected to fall by 8-9%.

PartyGaming attributes the lower number of players and reduced revenue to several factors. They cited seasonality as one reason for reduced interest in online gambling, as well as the World Cup.

However, the company also cited some issues that were specific to PartyGaming. For instance, there was a delay in the effort to open cash game online poker to Italy, which is now expected no earlier than the final quarter of 2010. This caused lower than expected earnings for the first half of the year.

PartyGaming is no stranger to falling revenues and other financial issues. For instance, when PartyGaming responded to UIGEA by suspending real money poker services for American customers, the PartyGaming stock price dropped by nearly 60% in only a day of trading. More recently, PartyGaming agreed to pay a $105 million penalty to the United States government as part of an agreement that would avoid prosecution for targeting US citizens for real money online poker. Overall, their 2009 revenue was down 47% compared to their revenue from 2008.

But it’s not all bad news for PartyGaming. Thanks to their license granted by the French government, they will soon be entering the French market, and have already made agreements that will set up an impressive network of partners in the country, inclunging PMU, AB Groupe and the Aviation Club de France. They have also had success with their acquisition of the World Poker Tour, which – combined with the resolution of their agreement with the US government – should leave them well-positioned to enter the US market if the country or individual states open regulated online gambling markets.