Online poker firm dealt a weak hand

LONDON - Shares of PartyGaming, the online poker operator that sold US$1.9 billion ($2.7 billion) of stock in a June initial offering, fell as much as 28 per cent after the company said growth rates were slowing.

The stock fell 32.5 pence, or 21 per cent, to 124.25 pence in London. The company first sold shares to the public at 116 pence apiece.

PartyGaming said customer retention rates were falling as more casual players came online. Competition is increasing in the market, which is 54 per cent-controlled by Gibraltar-based PartyGaming.

Empire Online, which helps poker and casino websites win customers, also had an initial public offering in June, and 888 Holdings, the world's largest Web casino operator by number of visitors, is planning a US$500 million share sale.

"Against a background of moderating market growth, group revenues are expected to continue to show good year-on-year growth, although at rates lower than the substantial rates previously experienced," PartyGaming said.

PartyGaming said first-half net income rose 25 per cent to US$171 million, or 4.5 cents a share, from US$136.5 million, or 3.6 cents, a year earlier.

Revenue, 92 per cent of which comes from fees for poker games played on the company's website, rose 81 per cent to US$437.4 million, PartyGaming said. Sales in the US gained 77 per cent, while growth outside the US more than doubled.

PartyGaming wants to expand in Britain, Scandinavia, Germany and Australia.

- BLOOMBERG