Online casino lifts Party Gaming trade update

Party Gaming plc, one of the industry’s strongest companies, released its pre-close trading update Friday, reporting a strong performance in casino mitigated by a softer seasonal performance in poker and bingo
Clean EBITDA margins for 2010 are expected to be in-line with expectations, around between 27 percent and 28 percent, Management noted, with the prospect of regulation in new markets offering ‘exciting’ medium to long-term revenue potential that could be accessed by additional investment
“Trading since the end of September 2010 has been solid overall with a particularly strong performance in casino that has enjoyed double-digit growth in average daily gross revenue versus the third quarter, driven by growth in both turnover and hold,” a company statement revealed.
“Poker has also seen growth in average daily gross revenue over the third quarter, although the usual seasonal pickup has been less pronounced than in previous years due to the strengthening of the Euro against the US dollar.
“In bingo, average gross daily revenue has grown versus the current trading data reported at the time of our Q3 KPIs, but remains lower than the third quarter.  This is due to the strengthening of the Euro against sterling and seasonality, as UK-based bingo players typically reduce their spend in the run-up to Christmas.
“While sports betting has continued to deliver a solid performance in the period, the benefit of the World Cup during the third quarter as well as a favourable series of results for punters has meant that average daily gross revenue in sports is down versus the third quarter.”
The update goes on to point out that an increasing number of territories are now actively exploring the merits of a regulatory framework for online gaming, and as a result Party Gaming is closely monitoring Germany, Greece, Holland, Denmark and Spain as well as other countries in Europe.  Whilst the shape and scope of any such regulations is not yet known, should some of these markets move to regulate, additional gaming taxes and investment may be required, the update cautions.
Management also notes that there is increased momentum in the United States towards regulating online gaming both at the federal and state level, and that Party Gaming is already strongly positioned to take advantage of any breakthroughs, having engaged with several licensed companies.   Should the requisite legislation be enacted, the Group is well advanced in discussions with licensed American companies that could create substantial value for shareholders.
The merger with Austrian-listed giant Bwin is on track, with an extraordinary general meeting of shareholders expected to be convened for late January 2011 and completion of the deal around March 2011.
Party’s chief executive, Jim Ryan, said: “Revenues in the fourth quarter have enjoyed their usual seasonal upturn.  Casino has performed particularly strongly with double-digit revenue growth over the third quarter, although currency movements meant that the uplift in poker has been less pronounced than usual.  Clean EBITDA margins are expected to be in line with our previous guidance for 2010.
“The proposed merger with bwin remains on-track to complete at the end of the first quarter and should place the combined group in a strong position to take advantage of the changing regulatory landscape in Europe given its leadership positions across all key product verticals.”

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