PartyGaming poker slowdown prompts downgrades

By Matthew Scuffham

LONDON (Reuters) - Online gaming firm PartyGaming (PRTY.L) reported a drop in the number of people playing its poker games in the last two months, overshadowing first-half results and prompting downgrades to earnings forecasts.

PartyGaming, which runs the PartyPoker site, said on Friday its trading since June 30 had been in line with management's expectations except for poker which continued to be slightly softer than expected.

In the 8 weeks to August 25, PartyGaming said average gross daily revenue was $1.6 million (874,000) per day. Average active poker players totalled 50,800 per day.

Chief Executive Jim Ryan, who joined the company at the end of June, said trading in poker since June 30 had been "slightly softer" than the company expected.

Ryan said the poker business was continuing to be held back by competition from sites which accept players from the United States.

"This represents a continuing competitive threat to listed businesses like PartyGaming that immediately stopped customers in the U.S. from playing or making deposits on any of the group's real money sites following the enactment of the UIGEA (Unlawful Internet Gambling Enforcement Act)," Ryan said.

He added that, while PartyGaming believes such companies are being investigated by the Department of Justice, there can be no guarantee that any action will be taken against them.

PartyGaming said it remains in discussions with the DoJ in the hope of securing a deal to end the threat of prosecution for taking internet wagers in the United States prior to the UIGEA being enforced in October 2006.