PartyGaming Reveals Cost Of US Withdrawal

by Jason Gorringe, Tax-News.com, London

23 October 2006

Gibraltar-based PartyGaming on Friday released its third quarter results, revealing the impact that the firm's forced withdrawal from the United States - along with many of its counterparts - has had.

Group revenue was reportedly up 53% to $337.2m (2005: $220.0m) and group revenue from non-US facing operations was revealed to have increased 158% to $92.0m (2005: $35.6m).

However, restructuring its operations following the passage of anti-online gaming legislation in the United States earlier this month is likely to cost in the region of $250m, the firm stated.

Commenting on the Q3 results, Mitch Garber, PartyGaming Chief Executive Officer, announced that:

“The impact of the recently passed legislation in the US has changed the shape of our business fundamentally."

He continued:

“Given the change in our business environment, the Group has already moved swiftly to reduce its cost base. Notwithstanding this, it is expected that the Group’s Clean EBITDA margin for the full year will be significantly lower than it was in the first half of 2006, reflecting the one-off costs of rationalising our business as well as the fixed nature of certain costs that were previously absorbed by a much larger revenue base."

He concluded:

“PartyGaming is a highly dynamic business, one that has proved time and again its ability to adapt to new challenges and new environments.”

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