[bigboydan]

They need to figure out a way to start letting people that live in the states start to play there again if they wanna make there shareholders happy.

PartyGaming Ups The Ante

If you‘ve been a shareholder since launch of PartyGaming (LSE: PRTY) , the online poker and casino operator, you've had a very poor run for your money.

Partygaming may be the world's biggest online gaming company but punters who took the chance of buying the shares at their 116p float price in June 2005 have lost more than three-quarters of their cash.

And their losses would have been even greater before today's mini-bounce on a more optimistic statement than analysts had been expecting.

The PartyPoker website operator has just announced that its overall pre-tax deficit, including discontinued operations, was $47.1m (£23.5m) in the six months to 30th June, compared with a $320.5m pre-tax profit for the same period in 2006. It was then that Gibraltar-based PartyGaming's problems really began as the U.S. introduced new legislation banning banks from dealing with online gambling firms. The company was forced to leave the lucrative American gaming market which represented of 75% of its business.

The poker operator's shares, which had peaked at 176p soon after the float, crashed and were then clubbed out of the FTSE 100 index.

But now PartyGaming is starting to recover from the US red card, which cost a ‘one-off' expense of $62m. Note that first half earnings from continuing operations before tax, depreciation and amortisation grew 29% to $36.9m.

The total number of new non-U.S. customers has jumped 83% to around 404,000, helped by an increased focus on affiliates (individuals and websites that help bring in new customers in exchange for a share of their revenue).

In July and August, daily revenues averaged $1.4m and the firm signed up an average of 1,192 new poker players a day. More than 70 official UK football club websites have agreed to promote the company's poker and casino brands as part of an exclusive three-year arrangement.

And Partygaming is becoming more confident about future prospects, developing a series of online gaming brands for a major UK household name, details of which will be given before the end of the year. It's also planning to announce new alliances with "leading" companies across the world to promote and grow the business. An Asian office will be opened next week which will allow the group to target partnership and affiliate deals in China.

Poker now accounts for just two-thirds of revenues, down from 86%, and a new sports betting division has been set up.

Is Partygaming now worth betting on?

Unsurprisingly, there's no half year dividend payout. As for the final amount, no comment from the firm.

Certainly a few doubts about the after effects of the Stateside shock still linger. The company is trying to establish whether it could yet face prosecution for taking bets in the US before the ban kicked in last October. Discussions with the US Department of Justice are ongoing, with the company anticipating a "satisfactory" conclusion.

Forming precise earnings estimates for recovery situations like this is notoriously difficult. Prior to today's statement, the range of analysts' guesses for next year's earnings per share varies from 1.05p to 2.12p.

That puts the 2008 prospective price to earnings ratio (PER) somewhere between 12.7 and 25.7 times.

Not particularly useful. But for stocks like this, the anticipation of reviving earnings momentum drives the share price as much as the actual numbers. And analysts could soon be upgrading their forecasts.

Assuming no further shocks, and for those punters who like a bit of excitement, I believe that Partygaming shares could be worth a small wager.

[john10774]

I wish they would let us start playing there again. It was easy to make money off the morons that played there.