PartyGaming to Look for Acquisition Opportunities

PartyGaming released a statement this week announcing they expect to take a one-off $250 million charge this year on the cost of closing down their US operations.

PartyGaming pulled out of the US this month following the President's signing of the anti-online gambling bill. Like many of their competitors, PartyGaming was heavily reliant on the US market, and following the Senate-approval of the Ports Security Act, which had the anti-online gambling bill attached to it, shares in publicly-listed online gambling companies like PartyGaming went into freefall.

However, PartyGaming's CEO Mitch Garber doesn't see the current situation as all doom and gloom. He believes the situation has created "a golden consolidation opportunity" for cash-rich PartyGaming. He also believes Europe and Asia as huge opportunities for expansion.

"If anyone is in a position to consolidate the market we are. M&A is a strong focus, and we will look to consolidate while we rationalise and that is the job ahead for the next couple of months," he commented, but he declined to clarify which targets are on the radar for his company.

Garber also believes there is a 50% chance of the anti-online gambling legislation being scrapped in the next three years if the balance of power shifts from the Republicans to the Democrats. However, even if that were to occur, it is unlikely that PartyGaming would be able to reassert their previously-held dominance in the US market. Rival companies that have chosen to remain in the US will hold a strong advantage, and casino giants such as Harrahs and MGM will also undoubtedly enter the online casino industry should the current legislation be overturned.

The loss of over 70% of PartyGaming's revenue following their decision to withdraw from the US market had the effect of wiping $3 billion off the market value of the company. Garber said moves to begin cutting costs were already underway within his company. It is expected staff will be affected, but it is unknown how many of PartyGaming's 2000 staff in Gibraltar and India will lose their jobs.

PartyGaming has been trading around the 30p mark in the last week, after hitting highs near the 150p mark earlier this year.

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