888 Announce Bumper Profits in 2007 H1 Results

Online gambling group 888 has reported a 298% increase in H1 pre-tax profits despite the UIGEA, which resulted in their withdrawal from the US market.

888 Holdings (LSE: 888.L)operates Casino-on-Net and Pacific Poker. The company announced in July they were hitting all management targets, and the release of their 2007 H1 results confirmed a full recovery from the UIGEA for the publicly-listed online gambling group.

The CEO of 888 Gigi Levy said that, despite losing almost half their customer base and 55% of revenues after the UIGEA, "the turnaround we had begun to achieve at the full year (2006) has been successful and we have maintained our track record of profitability".

Levy told Reuters it was too early to predict the outcome of ongoing talks with the US DoJ but that the company would be looking to make a deal after PartyGaming had been dealt with: "PartyGaming were so much bigger than us in the United States so I'm sure on ... the Department of Justice's list we are just a small fish. We don't have any rush to close negotiations, we want to reach something that will be a good deal, not just a deal."

There has been some speculation suggesting that the USAO doesn't have the same leverage against PartyGaming and 888 that it held against NETeller, who paid a $136 million fine to free $94 million in US account holder funds frozen by the DoJ and remain on the AIM trading index. It is expected that PartyGaming and 888 will only pay fines with a view to re-entering the US market.

Financial highlights from the 888 Interim Results report include:

• Net Gaming Revenue (NGR) up 24% to $97m


• Profit before tax up 298% to $19m


• 22% NGR casino growth


• 19% NRG poker growth


• Interim dividend of 1.8c per share

H1 achievements included:

• launched a 'white-label' platform


• increased language infrastructure program for Casino-on-Net to 12 languages (with future launches in all languages planned for Pacific Poker)


• new poker software and casino games launched


• unified client (casino, poker, backgammon) launched which enables increased cross-selling


• bingo assets fully integrated

H2 plans include:

• new casino slots and video games including a branded Marilyn Monroe slot


• new poker features


• Italian and global sports books to be launched


• more white-label and strategic partnerships with two deals in "advanced stages"


• growing focus on Entertainment and reach

In addition, a record July performance has given the company a great deal of optimism heading into H2.

888 Holdings (LSE: 888.L) closed at 119.25p yesterday whilst PartyGaming (LSE: PRTY.L) closed at 26.75p. Both stocks have shown they have recovered strongly from the UIGEA, and could be worth some buys on the gamble that neither company will decide to pay USAO fines unless those fines are directly linked to US market re-entry.

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