Party Gaming lost about 75% of its revenue overnight when withdrawing from the U.S. market in consequence of the new U.S. gambling legislation connected to the Safe Port act. The share price plunged a
PartyGaming lost a lot of high-yielding players to sites that continue to take US business despite the enactment of the UIGEA legislation, and saw a 31% reduction in yield per active player day.
The company also experienced a near $100 million reduction in client liability balance as players withdrew their funds from the Party Gaming system and moving to sites with better liquidity (that is, active players). Some high-ranking players have begun to come back in recent months, though.
Nevertheless, the preliminary results for 2006 talk of a company that has mastered the adversities very well and stands stronger than many competitors. By restructuring the cost base, such as rationalizing more than 40% of the work force over a three months period, reducing the marketing expenditure, as well as focusing on non-us markets, the overall numbers show a strong progress.
The revenue has gone up 112%, to $325 million, and the number of new sign-ups increased by 133% to 527 000. Profits were $138.9 million after spending $250 million on reorganization.
The situation is promising in Europe with the EU aiming at neutralizing national gambling monopolies, and Asia, where for example the Indian market is huge.
"Business outside of the U.S. is in excellent shape," said Mitch Garber, Chief Executive Officer of Party Gaming.
