May 6, 2010 / 6:30 AM / 8 years ago

UPDATE 2-PartyGaming eyes return to US as Q1 revenue jumps

* Says in preliminary talks over M&A opportunities

* In talks with U.S. operators over partnership deals

* Q1 revenue up 27 pct to $127.1 million

* Poker hit by competition from U.S.

* Shares down 1.6 percent

(Adds CEO, analyst comment, shares)

By Matt Scuffham

LONDON, May 6 (Reuters) - Online gambling group PartyGaming PRTY.L said it was gearing up for a possible return to the United States if legislation banning the industry is overturned, after reporting a 27 percent rise in first quarter revenue.

PartyGaming, which operates the PartyPoker and PartyCasino sites, said it was encouraged by congressmen Barney Frank and Jim McDermott’s moves to push through a new bill to regulate online gambling which was made illegal in the United States in 2006.

Chief Executive Jim Ryan told reporters the most likely initial move by U.S. authorities would be to legalise online poker, seen as a game of skill, which could in time lead to other forms of online gambling being allowed. “We are seeing increased momentum towards regulating online poker. It’s possible that it could happen this year and we’re prepared if it does,” Ryan said on a conference call.

Ryan said PartyGaming had set up an operation in Los Angeles with 38 staff and was in talks over possible business-to-business deals with U.S. operators.

“We’ve got any number of U.S. operators who we’re talking to right now about providing them with online gaming services and software. That gives us good reason to think that regulation isn’t that far way,” he said.

Rival 888’s (888.L) Chief Executive Gigi Levy said last month he expected changes to online gaming laws in the U.S. to be implemented in the coming months. [ID:nWLA2613]

Analysts say the online gaming industry is ripe for consolidation and PartyGaming is reported to have held talks with Austria’s bwin BWIN.VI over a possible combination. [ID:nLDE5BT1CA] [ID:nLDE63F1BF]

    “We are actively working on various opportunities. Discussions are at a preliminary stage with those that we are talking to,” said Ryan, who declined to confirm whether the company was in talks with bwin.

    PartyGaming reported first-quarter gross revenue of $127.1 million, benefiting from growth in its casino, bingo and sports betting divisions. However, revenue from the group’s poker offering declined because of competition from websites continuing to take bets from U.S.-based gamblers illegally.


    PartyGaming said its average daily revenue had slowed in the second quarter which is traditionally a quieter period for the industry and were down between 6 and 7 percent on the average for the previous quarter.

    The company also said it had signed a business-to-business deal with Aviation Club de France which will join its French poker network. France made certain kinds of online gambling legal in April. [ID:nLDE63D0M5]

    Shares in PartyGaming were down 1.6 percent to 280.4 pence at 1023 GMT. The shares have lost 15 percent of their value over the last month reflecting disappointment over the lack of developments on the M&A front and the read-across from a weak trading statement from rival 888.

    “None of these factors detract from the long-term attractions of PartyGaming as a leading player in a global growth market. Therefore, we view the recent share price weakness as a buying opportunity,” said KBC Peel Hunt analyst Nick Batram. (Editing by Paul Sandle, Mike Nesbit)

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