US exit costs PartyGaming $250m

PartyGaming revealed yesterday that it will cost $250m (£133.3m) to re-shape the business after shutting its American online poker operation, but committed to maintaining a presence there.

Like others in the sector, PartyGaming was forced to suspend operations across the US after President George Bush ratified a law to outlaw gaming on the internet. Now PartyGaming, the world's biggest internet poker group, is looking at ways to offer services to the 10 million American customers not banned under the Unlawful Internet Gaming Enforcement Act.

Martin Weigold, PartyGaming finance director, said: "We have looked at 15 or 20 ways to monetise our American assets. But it's early days." He declared consolidation "inevitable" in the wake of the new legislation and stressed that PartyGaming was always alive to potential acquisitions. "There is going to be a number of companies that exit this market," Mr Weigold said. "Some will be voluntary, where they sell to a bigger player, and some will be involuntary."

PartyGaming, led by its chief executive, Mitch Garber, derived the lion's share of its revenues from the US. But figures yesterday showed that its business outside the US is burgeoning. In the three months to the end of September, PartyGaming's revenues from outside America surged 158 per cent to $92m.

The number of days players outside the US were playing poker was 134 per cent higher at 3.9 million, driving net daily revenues from this area 151 per cent higher to $800,000. PartyGaming is signing up players in record numbers, but revenues from outside the US eased 2 per cent in the week since it the closure there. Across the group, quarterly revenues were 53 per cent higher.

The group is also likely halve its $300m marketing budget, and "rationalise" its 2,000 workers in Gibraltar, Bulgaria and India. The shares, which stood at about 100p ahead of the ban, eased 2.75p to 29p yesterday, valuing PartyGaming at £1.2bn.