Watch and Learn from Party Gaming Response to UIGEA
30th August, 2007
The biggest online gambling company in the world, Party Gaming, which is based in the Gibraltar, had to deal with the huge losses adding up to $47.1 million in half a year due to the US Unlawful Internet Gambling Enforcement Act.
When the UIGEA came into action in October 2006, Party Poker and Party Casino were forced to rebuild their business, as they were prohibited to accept any wagers from the US. In the first six months of 2006, their American gambling users increased firm’s revenue by $512 million. The additional earnings before interest, tax, and ebitda used to add up to $352 million on top of the revenue earnings.
Due to the loss of such a huge part of the company’s income, chief executive Mitch Garber had to refocus his concentration and develop business elsewhere, which is why the European, Middle Eastern and African markets are now demonstrating rapid growth in the sector. Despite the fact that these markets already produced 42% revenue rise, making the total $213 million, Party Gaming is still suffering share devaluation from 116p in 2005 to an operating loss of $47.3 million.
Nevertheless, the success in non-US markets is clearly evident, as there has been a record number of real-money players signing up over the half. Party Gaming management is still fighting with the American government to try and negotiate a deal that would preferably for the company get rid of the prosecution possibility that would occur if the company accepts wagers from US players according to the UIGEA.
This is what Mr Garber, Party Gaming chief executive had to say on the issue: "I can look at NETeller [the online payments system] and that took months not years, so if I judge from what I've seen then it is months, but I don't know." He also added that we can expect a new announcement from the organization about “a number of further important business alliances with leading companies over the coming weeks and months".
It turns out that the firm is now involved in negotiating deals, which would be similar to the existing affiliations with football league clubs, i.e. having third parties use Party Gaming’s assets, such as technology, brand, games etc.
In a month leading up to 26th August, saw average gross revenues of nearly $1.42 million per day.
It is hard to believe how the company that was mainly focused around their US customers and was making huge money in the market, would deal with such external threat so fast and proper. Other online poker and online casino providers should watch and learn from the best!
