UIGEA to cost PartyGaming $1 billion in 2007

Dresdner Kleinwort downgraded 2007 revenue projections from $1.513 billion to $450 million in financial reports released Friday. The bank also reduced 2006 revenue forecasts from $1.344 billion to $1.134 billion.

PartyGaming's report did show some good news. Third-quarter revenue grew by six percent to $337.2 million. But this reporting period does not include the days following the passage of the UIGEA.

The company will also suffer a one-time restructuring charge of $250 million in 2006 as a result of leaving the U.S. market.

"The impact of the recently passed legislation in the U.S. has changed the shape of our business fundamentally," said PartyGaming's CEO Mitch Garber.

The company logged 1,024,204 active players during the third quarter. But 824,556 of those players were based in the U.S. and are now cut off from the company. Its non-U.S. business has been surging lately, with overall group revenue growing by 21 percent to $92 million in the quarter.But since shutting Americans out from its real money sites one week ago, average daily gross revenue for the non-U.S. facing business has been 2 percent below the third quarter average.

PartyGaming has removed tickers from its PartyPoker network that show the number of active players and tables. A PartyGaming spokesperson told the Guardian this was done so that rivals like PokerStars could not use the reduced numbers against it.

"In the very near term, PokerStars can be an issue," Garber told a conference call. "But the playing field is going to become much more level. Most of the banks and processors are set to leave the industry."

The company stresses that it remains well-positioned to succeed in global endeavors. "We continue to grow what is already a substantial business outside of the United States," said Garber to the conference call. "PartyGaming is very much open for business for customers around the world. We do have the world's largest non-U.S. poker site by a large margin."

"We continue to look at several merger and acquisition opportunities as well as pursue talks with new strategic partners," he added.