PartyGaming shows its hand

You’ve announced interim results. What’s behind growth?

I think there were two factors that drove the growth in both Poker and
Casino. I think in Casino, where we saw substantial growth, that was clearly
driven by the launch of Blackjack in October of last year. And then it was
subsequently influenced by the launch of PartyCasino in February of 2006.

For Poker, I think the main drivers were continued growth in new sign-ups, as
well as the platform split, where we saw a number of high-yielding players
return to the platform.

We’re seeing numbers related to the performance of PartyGammon for
the first time, and you described June as a promising start. But in reality,
aren’t the revenues rather slow compared with the launches of other

I don’t think it’s possible to compare everything to the success of
Blackjack. I very much think that that was a one-off, an exceptional performance
for any business, let alone for an online gaming business.

And we are very pleased with what we’ve seen to date. We are generating
revenues of around $1m per month. We haven’t really put a great deal of
marketing support behind it just yet.

Clearly, before we start cross-selling it into our other divisions, we want
to know what impact it will have on the spend in those other divisions. But it’s
early days, and we’re certainly encouraged by the start.

In reporting terms, how long will a game be seen as an Emerging Game
and when will it qualify to be accounted for separately?

That will simply be driven by how big the game is. As soon as it becomes
material in its own right, then I think we’ll break out Backgammon as a separate
segment. The only exception is for sports betting. We’ve taken the view that
we’re going to break that out at the outset, because it is likely to be a
material segment going forward.

Are you intending to hold on to all your money for further
acquisitions or is there a possibility of a share buy-back?

There is a possibility of a share buy-back. It’s something that we look at
all the time and obviously we benchmark the returns that we could get by doing a
share buy-back against the acquisitions that we’re looking at. So, yes, there is
always that possibility, but right now there’s nothing planned.

If our plans change, then obviously we’ll make an announcement to the market
at the appropriate time.

Following the recent decision in the European court, what are the
implications on the Gibraltar tax regime?

We are very pleased, because it has effectively removed one of the risks
associated with the replacement tax regime that will come into effect at the end
of 2010. It has essentially taken away the risk that Gibraltar would have to
adopt the same rate of corporation tax as the UK, which is currently 30%.

So we’re very encouraged, and we expect a low-cost tax regime that’s
non-discriminatory to take its place when the tax-exempt scheme is phased out.

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