Net Bet Blog

PartyGaming (PRTY) was down 5% in early trades after issuing a downbeat trading statement early this morning.

Whilst clean EBITDA is expected to be higher due to lower costs the worry continues to be the poker revenues which are falling. PRTY need to have a radical rethink in my opinion. They are simply losing the battle against the US big boys such as Pokerstars and coming under increasing pressure from the likes of PKR and even Ladbrokes (who are slowly using their financial muscle to leverage their strong brand).

I believe PRTY should snap up PKR now - it may already be too expensive for them. PKR is ground breaking and the future of Poker. It is a pity that PRTY may already have left it too late. Having now played on many sites as part of my extensive research there is no comparison.

Pre-close trading Update [ADVFN]

Since 28 April 2008 gross revenues have, as expected, fallen slightly due to seasonality and competition for players' leisure time from the Euro 2008 football tournament. Casino has continued to perform strongly but this was offset by a weaker than expected performance in poker and sports betting with overall revenues slightly lower than expected. However, operational efficiencies and lower marketing costs mean that Clean EBITDA margins in the first half are expected to be substantially higher than in the comparable period in 2007.

The strong performance in casino has been driven by an increase in the number of players and cross-selling from poker. Since their launch in May, two new branded slot machines, Mission:Impossible and Saturday Night Fever, have proved particularly popular and bingo is now starting to gain traction in the UK following the launch of Bingo Night Live on ITV1.

In poker, despite making the new loyalty scheme more generous to our VIPs, the cost of PartyPoints had been reduced to previous levels by the end of the second quarter, with the full benefit expected to be realised in the second half of the year. However, strong competition, particularly from poker sites that continue to accept US players, has led to an increase in bonuses and costs associated with some of our poker tournaments in the period.

In sports betting, Euro 2008 saw a marked increase in betting volume, but a poor run of results at the start of the tournament impacted the gross win margin.

The full year result will be impacted by a $4m one-off charge associated with the
replacement of the Chief Executive that has been incurred in the first half. However, a number of new initiatives in poker, the addition of further branded slot machines during the second half and continued progress on UK bingo lead the Board to remain confident about the Group's prospects for the full year.