Online gaming giant PartyGaming recently released its interim results from the first half of 2009 and the big news is that the company saw a 6.5% drop in earnings from this time last year. While the company’s earnings dropped to $60.7 million in 2009 compared to $64.9 million this time last year, the numbers are actually slightly ahead of industry expectations, which projected PartyGaming’s interim earnings to be around $58.7 million.
In PartyGaming’s official statement to shareholders the company’s CEO Jim Ryan attributed the drop to two key factors: the economy and the tough competition in the online poker market. Ryan cited the global economic downturn and currency movement as a major contributing factor to the company’s performance. He then went on to once again discuss the persisting issue of competitors in the online poker market continuing to offer their services to US customers whereas PartyPoker, the company’s online poker site, ceased serving US players following the passage of the Unlawful Internet Gambling and Enforcement Act (UIGEA) in 2006.
PartyPoker saw a substantial drop in net revenue in the first half of 2009, falling 21% to $102.6 million from $153.9 in 2008. The lack of revenue from online poker was mitigated by a strong performance from PartyGaming’s online casino. The company estimated that PartyPoker currently holds 7% of the global online poker market, a slight drop compared to 8% in 2008. While PartyPoker’s overall performance dropped compared to last year, PartyGaming remained positive about the site’s future. The company report lauded the revamped customer loyalty program and the success of new promotions like the Million Dollar Hand and Gladiator.
One area in which PartyPoker saw an increase in numbers in 2009 is new member recruitment. The site picked up just over 250,000 new customers from January and June, up from 235,000 in 2008. The report also emphasized PartyPoker’s renewed focus on player retention which led to an increased number of players staying active six months after signing up as well.
The company’s Italian poker venture, Intralot, contributed to the increased number of new members. While Intralot currently only offers tournament poker play, PartyPoker expects to receive a gaming license from the Italian government that will allow them to offer cash games in the near future.
Intralot is just one of a number of business to business deals conducted by PartyGaming in the first half of 2009. The company also acquired popular online bingo company Cashcade, made a deal with the British television network Five to offer a Five-branded online casino and, most recently, purchased World Poker Tour Enterprises for $12.3 million.
When discussing the company’s performance for the second half of the year, Ryan emphasized the importance of these recent deals and acquisitions. “Our B2B strategy has delivered four deals so far this year that will start to contribute during the final quarter of 2009”, Ryan explained. “With more deals in the pipeline we remain confident that we can continue to grow this important new source of revenue.” Ryan went on to cite the company’s strong performance in August as a sign that the second half of the year will likely finish 2009 on a high note for PartyGaming.

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