Ups and Downs for PartyPoker Parent PartyGaming This Week

Good news and bad news made headlines this week concerning PartyGaming plc, one of the industry's largest online gambling groups and owner of online poker room Party Poker. Yesterday, Reuters reported that a drop in the number of poker players these past two months overshadowed PartyGaming's first-half results, prompting downgrades to earnings forecasts. And today, PartyGaming announced that three key operations passed the stringent Safe and Fair accreditation process of the player protection and standards non-profit organization eCommerce and Online Gaming Regulation and Assurance (eCOGRA.)

ABOUT eCOGRA AWARDS

Commenting on the awards, eCOGRA CEO Andrew Beveridge said: "After extensive testing and inspection by the eCOGRA professional compliance team, PartyGaming passed with flying colours."

"Our independent directors have awarded the revocable Safe and Fair seal, and are satisfied that PartyCasino.com, PartyPoker.com and EmpirePoker.com meet the required standards for responsible gambling, player protection, management and fiscal integrity and operational best practice."

PartyGaming is a member of the European Gaming and Betting Association (EGBA), for whose best practice standards eCOGRA provides assessment services and shares common goals in securing high standards of operational and regulatory compliance.

PartyGaming CEO Jim Ryan said: "PartyGaming is committed to responsible gaming and wants all of our players to play on our online sites for the right reason - to have fun and play within their means. These new seals show our sites provide our players with a very high level of protection backed by our EGBA membership and eCOGRA accreditation."

Founded in 1997, PartyGaming is a constituent of the FTSE 250 share index with its shares listed on the London Stock Exchange under the ticker: PRTY. The group is regulated and licensed by the Government of Gibraltar and by the Alderney Gambling Control Commission and is certified by GamCare as a responsible gaming operator.

ABOUT EARNINGS DOWNGRADE DUE TO POKER PLAYER DROP and DOJ DISCUSSIONS

A drop in the number of poker players these past two months has overshadowed first-half results and prompted downgrades to earnings forecasts, reported Reuters yesterday.

PartyGaming said its trading since June 30 had been in line with the management's expectations except for poker which continued to be slightly softer than expected. In the eight weeks to August 25, PartyGaming said average gross daily revenue was a million Euros per day. Average active poker players totaled 50,800 per day.

Chief executive officer Jim Ryan, who joined the company at the end of June, said trading in poker since June 30 had been "slightly softer" than the company expected.

Mr Ryan said the poker business was continuing to be held back by competition from sites which accept players from the US.

"This represents a continuing competitive threat to listed businesses like PartyGaming that immediately stopped customers in the US from playing or making deposits on any of the group's real money sites following the enactment of the UIGEA (Unlawful Internet Gambling Enforcement Act)," Mr Ryan said.

He added that, while PartyGaming believes such companies are being investigated by the Department of Justice, there can be no guarantee that any action will be taken against them.

PartyGaming said it remains in discussions with the DoJ in the hope of securing a deal to end the threat of prosecution for taking internet wagers in the US prior to the UIGEA being enforced in October 2006.

He told reporters the company is targeting a successful resolution the DoJ this year, but emphasized the timeline for resolution of the talks is not within PartyGaming's control.

New non-executive chairman Rod Perry, who was previously senior independent director, is overseeing the talks.

"To bring continuity to the DoJ discussions Rod Perry, our newly-appointed chairman, will be taking over the day-to-day management of the DoJ process freeing me up and allowing me to focus my efforts on daily operations," said Mr Ryan.

Disappointment with current trading led to some brokers downgrading their earnings forecasts for the company.

In a research note, Deutsche Bank said PartyGaming's gross revenue was down nine per cent in August compared with July, while the average number of active daily poker players in July and August was 19 per cent lower than in the first half.

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