The online poker giant, PartyGaming plc, having yesterday been dealt a forceful blow to its key American gaming business by the shock US law changes, has responded by announcing its intention to redouble its customer recruitment drive elsewhere.
Shareholders have already taken a severe beating to their portfolio due to the precipitous fall in the share price yesterday (down by 60% in one day), and now they have learned that the interim dividend worth 3 cents per share that was slated for payment at the end of October has also gone west, resulting in another 10% fall to 40p.
Instead, Party Gaming has a new task for those monies, amounting to the enormous sum of approximately $114,000,000 - Seeking out "opportunities".
In Party Gaming's own words:
"Following the decision taken by the Board to suspend all real money gaming business with US residents upon the Safe Port Act being signed into law by President Bush, which is expected within the next two weeks, the Board has today decided to cancel the Company's interim dividend that was due to be paid on 31 October 2006.
"The Board believes that cancellation of the interim dividend will allow the Company to take advantage of the many attractive opportunities in the sector that will emerge over the coming months. In due course the Board will review the appropriate dividend policy for the ongoing Group."
The wording "take advantage of the many attractive opportunities" could be interpreted in more ways than one.
Perhaps it means a concerted and full-blooded drive to sign up a vast army of new players in the established European market or the developing Asian and South American sectors.
Alternatively, Party Gaming may simply believe that this is the cue or trigger for the long-anticipated consolidation in the industry. After all, it is likely that a high number of the smaller operators – those that use the various popular poker table "skins" run by software developers – could find themselves facing a cashflow crisis minus their American players. If the business cannot fend for itself with only non-US players remaining, those non-US players are effectively up for grabs. Will Party Gaming, and some of the other big players, be hoovering up these businesses?
The answer is probably a mix of the two. It has been easy to become gloom-laden but there is a huge growing market still forming. America was maturing as an online market. This much was obvious from the strategies being undertaken for some while by the major players, expanding their operations and marketing efforts into Europe and Asia.
We are naturally sad for the true poker players of the US the majority of whom are almost certainly not "gambling addicts" in the sense portrayed by the prime movers in these political manoeuvrings; but life has to go on and certainly this is true for Party Gaming and the other companies.
$114,000,000 is heavyweight proof of this!
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