PartyGaming signs Cirsa white label deal as 2008 EBITDA set to beat forecasts 12/02/2009

Jake Pollard

PartyGaming said it expected full year 2008 EBITDA of at least US$143m this morning, ahead of forecasts of US$138m and chief executive Jim Ryan highlighted the company’s white label deal with Spanish gaming giant Cirsa that will see Party act as a technology provider for the Iberian company’s outlets in Spain and Central and South America.  

The three-year deal will see Party provide Cirsa with online gaming products across its casino, bingo halls and sports betting venues, with the first Party-Cirsa products launched in May this year.

Speaking during the company’s presentation of its fourth quarter key performance indicators, Ryan said Cirsa would leverage its reach across Spanish-speaking countries worldwide but the nature of the deal meant that Party would not be making any upfront payments for marketing or market access purposes and would act purely as a technology provider to Cirsa.     

Party’s dealings with the US Department of Justice were ongoing, Ryan said, but the company was in control neither of the process or timing of when a possible settlement might be announced. However, Ivor Jones of Evolution Securities said he expected a settlement announcement to be “weeks rather than months away” in a note published this morning. 

Ryan pointed out that as the leading US-focused operator prior to the passing of the Unlawful Internet Gambling Enforcement Act in 2006, PartyGaming would look at utilising the database and player information it had at its disposal should the US regulate online gaming.  

Party’s group revenue for the fourth quarter of 2008 was US$100.4m, down from US$122.4m in 2007 but making US$472.9m for the full year, a 3% increase over the prior year on US$457.8m achieved for the full year in 2007. Jones said the economic pressures and weak economy meant that 2009 EBITDA would likely to be similar to 2008.

Factors for the drop in quarterly revenues were of the US dollar against the Euro, Canadian Dollar and Sterling and increased continued strong competition in poker and promotional costs associated with the relaunch of the PartyPoker platform at the end of September 2008.

Party said currency fluctuations had affected revenues adversely in the region of US$15m and ongoing pressure from US poker sites meant active player days had fallen 14% year-on-year even though they had risen 7% on a quarterly basis.  

Player yields and frequency were adversely affected during the period, but the number of new player sign-ups increased by 22% and the number of unique active players increased by 8% versus the previous quarter reflecting good growth in poker, casino and sports. Ryan admitted that the company’s sports margins were below that of the competition and it was working on improving the performance of that segment of the company.

The rise in the value of the US Dollar in the five weeks ended 4 February 2009 has continued to impact Party revenue, the company said. Average gross daily revenue was US$1,4m, a 2% drop on 2008 fourth quarter. New poker sign-ups increased to an average of 1,494 per day, and there were on average 51,000 active players per day generating average gross daily poker revenue of US$756,700, a 4% decrease over the previous quarter. In casino, gross revenue was stable at US$597,200 per day. In sports, the amount bet per day increased 13% on the fourth quarter of 2008 to US$1,6m, gross win margin was stable at 4.5% and generated daily gross win of US$75,700, compared with $68,400 in the previous quarter.

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Posted: 12/02/2009