PartyGaming is an online poker company, and also offers casino games and sportsbook betting. The company is not allowed to let players from the United States gamble on its website due to the UIGEA legislation (Unlawful Internet Gambling Enforcement Act).
PartyGaming's total revenue increased 40% from 2006 to 2007, and the online casino and sportsbook total revenue increased 188%.  The company plans to add bingo, backgammon, and a trading game to its list of product offerings. As a result of a large customer base in poker, the company can market these new games directly to its existing poker players -- 29% of the poker players played at least another Party game within the same month.
PartyGaming had 1,145,600 active players at the end of 2007, of which 683,700 were new player sign-ups. The active player base grew 53% from 2006 to 2007. Furthermore, PartyGaming had 28.4 million active player days in 2007, an increase of 67% since 2006. (Active player days are the total number of days played by each of the players.)
PartyGaming has three lines of business (all online): poker, casino, and sportsbook. In 2006, their operations took a serious setback when the enactment of UIGEA (Unlawful Internet Gambling Enforcement Act) on 13 October 2006, PartyGaming halted the United States customers from playing or depositing into the real money site. At the year end of 2006, PartyGaming discontinued revenues (US revenue) were $779.9 million, representing 71% of their total revenues. The discontinued revenues represent the customers that will not be able to contribute to revenues in the future.  Yet, PartyGaming continues to expand as it added 683,000 new players in the year 2007. 
PartyGaming uses a commission-based revenue system where they take in a rake of the winning pot. Thus, they depend on retaining their active customers and successful marketing to acquire new customers. These key metrics determine PartyGaming's health:
1. Number of Unique Active Players is the number of unique players that wagered in the site during the year.
2. Active Player Days is the aggregate number of days in a given period in which active players contributed to rake or placed a wager.
Ex-US statistics are used to show the growth in the available market.
|Ex-US Revenue ($M)||$153.2||$325.0||$457.8|
|Ex-US Number of Unique Active Players (000s)||284.7||749.0||1,145.6|
|Ex- US Active player days (m)||6.5||17.0||28.4|
Note: "Continuing" represents the numbers from the available market
Poker (64% of Continuing Revenue, 56% of Continuing Clean EBITDA) is the main revenue stream for the company. PartyGaming takes a percentage of the winning pot in ring games and of the buy-in from tournaments. The number of active players (player liquidity) are pertinent for success because many players are needed at a single table to make it interactive. The poker revenue growth grew 10% from the previous year and had 924,700 unique active players, and $808,300 average daily revenue. 
Casino (32% of Continuing Revenue, 39% of Continuing Clean EBITDA) had the fastest revenue growth of 188%. Casino players bet against the house, and the outcomes are randomly determined but favor the house. Player liquidity is not as important for casino games. Customers do not need other customers to play, since bets are placed against the house. This segment had 534,600 unique active players and $402,100 in average daily revenue. 
Sports Betting (4% of Continuing Revenue, 3% of Continuing Clean EBITDA) is the latest addition to PartyGaming's business, and developed from the acquisition of sports betting company Gamebookers in 2006. Players bet against the house, so player liquidity is not as important. Sports betting grew by 188% in revenue from the previous year, had 168,500 unique active players, and $44,000 in average daily revenue. 
Before the UIGEA (Unlawful Internet Gambling Enforcement Act) was passed in 2006, the United States represented two thirds of PartyGaming's total revenues. In 2006, the US represented about 48% of global online gaming revenues, and in 2007, GBGC believes the number fell to 36% with the withdrawals of numerous companies including PartyGaming. 
PartyGaming is based in the British territory Gibraltar, where the company pays no corporate taxes and only a 15% tax on personnel and property. However the exempt company tax regime is to be phased out by 2010. This means that PartyGaming may seek to relocate to other countries with similarly beneficial tax policies. Major online poker competitors such as BodogLife, Poker Stars, and others are located in these countries due to their taxation policies.
PartyGaming has cited that the quietest quarter each year is the second quarter, while the first and fourth quarter is usually the strongest. The main proponent is the increase in daylight hours and weather, people tend to spend less time online and do other things. Also, since the EMEA region has holidays in the third quarter, this time of the year is also more quiet than the first and fourth quarter. 
|Company||Rev. 2007 ($M)||Market Share||Active Players|
There are many competitors in the online gaming industry, and there is not a single dominant player with a large market share (over 25%). Thus, this industry is fragmented.