Poker news source: Times Online - http://business.timesonline.co.uk/
PartyGaming expects to lose $250m but remains upbeat
By Dominic Walsh
PARTYGAMING, the online gambling operator, is to take a $250 million (£133 million) hit against the closure of its American business in the wake of the ban on internet gambling .
The company, which in recent days has been evicted from the FTSE 100 and lost its crown as the world’s biggest internet poker firm, admitted that the restructuring would mean unspecified job losses among its 2,000-plus staff.
Mitch Garber, PartyGaming’s chief executive, said: “Thankfully, the internet is not a labour-intensive industry. Just because you lose 75 per cent of your players doesn’t mean you lose 75 per cent of your staff.”
He said that the rationalisation could include a salary cut for directors, although he emphasised that, despite the loss of its US business, PartyGaming was still a sizeable and profitable company. Dresdner Kleinwort, its house broker, predicted yesterday that it would deliver 2007 earnings before interest, tax, depreciation and amortisation of $149.9 million, down from a pre-ban forecast of $847.1 million, while revenues would come in at $450 million instead of $1.53 billion.
Martin Weigold, finance director, confirmed that a new share options scheme would be implemented following the collapse of its share price.
In a third-quarter trading update, the company reported a 158 per cent jump in revenue from non-US operations and Mr Garber said that on Wednesday it had experienced “the highest number of non-US sign-ups we’ve ever seen”.
In the first few days after the closure of its American business on October 13 the average daily gross revenue of its continuing business slipped by 2 per cent as players sought out rivals with a larger number of players and greater liquidity.
However, Mr Garber said that it would be some time before a true assessment of the group’s position could be made as rival sites such as Sportingbet’s Paradise Poker were still staying open to US players with deposits made before the ban.
He predicted that PokerStars, which has knocked PartyGaming from the top spot after vowing to continue accepting US punters, could find life difficult “when the full force of the Act comes into effect”.
He said that, in addition to growing its European business, the company would seek to attract new customers in Canada, despite moves to ban internet gambling advertising in Ontario. Mr Garber, who hails from Montreal, said that he would be meeting the Canadian Government in the new year to discuss a possible framework for regulation.
Mr Garber said he did not feel angry about the US ban: “I feel frustrated because I believe that online poker in a regulated environment with strong age verification and anti-money-laundering policies should not be illegal anywhere.” |
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