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PartyGaming Reports Drop in Operating Profit


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This week leading online gambling group, PartyGaming Plc, reported a
6.5 percent drop in its first-half operating profit, which is thought to be a
result of pressures from the highly competitive online gambling industry, a drop
in players and the $101 million in restitution it was forced to pay U.S.
authorities.

As part of the restitution, PartyGaming agreed to pay U.S. authorities $105
million over a 42-month period, which was a great contributing factor to the
company’s first-half pre-tax loss of $66.9 million. This was in direct contrast
to the same period last year, when PartyGaming reported a notable profit of
$22.7 million.

The online gambling giant, which owns and operates top online poker room,
PartyPoker
, posted an operating profit of $60.7 million on its revenues,
which was a drop of 21 percent to $201.3 million for the six months to the end
of June this year. However, the firm has reported a turnaround in the last few
weeks.

In the last three weeks to August 18, the company reported its gross daily
revenue as $1.9 million, while the average number of active poker players on its
website grew to around 51,000 per day. Said PartyGaming CEO, Jim Ryan,
‘Currently, our poker revenue is stable and our casino sales are continuing to
grow.’

Soon after PartyGaming released its results, its share price dropped 2.8 pence
to 263.2 pence. But over the past year, PartyGaming shares have skyrocketed by
35 percent, giving the online gambling firm a value of $1.8 billion. And despite
its results, PartyGaming made headlines this week with a new acquisition.

The acquisition was PartyGaming’s first since it pulled out of America in 2006.
It paid $12.3 million in cash, and agreed to three annual installments of $3
million each, for World Poker Tour Enterprises Inc (WPT). The acquisition will
strengthen PartyGaming’s reach into America once its online gambling ban is
reversed.

The funding for WPT reportedly came out of PartyGaming’s $40 million
acquisitions kitty for poker, casino and bingo interests. The kitty funded the
recent purchase of online bingo firm, Cashcade Ltd. ‘It opens the capital
markets to us to enable us to pursue acquisitions we otherwise wouldn’t have
been able to, said Ryan.

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