PartyGaming --- NOT Party Poker --- Posts '06/Q1 54% Revenue Gain

The recent release of 2006 first-quarter fiscal results for PartyGaming PLC, the online gaming giant centered around Party Poker, gives us some clear insight into the current state of the poker industry. On one side are the media types who want to write that the newness and faddishness of poker is gone, and since these folks have written their requisite two pieces about the game, it's time to move on to the Next Big Thing.

Oopsie. PartyGaming just posted a 54% increase in revenue for the quarter. So much for the brilliance of writers wanting to chalk up poker as Beanie Babies or Magic: The Gathering for adults. Or whatever.

But hold on a moment, before celebrating too deeply. That's a 54% increase in revenue at PartyGaming, not Party Poker, as this post's title indicates. PartyGaming is the umbrella under which the poker operations and all other online gaming revenues are collected. So since precious few other media outlets have bothered to read through the PartyGaming release and find out the specifics, we'll note that pointing to Party's release as being another big spike in online poker revenues is being just as lazy in the opposite way.

To find out how Party's poker revenues stand, we need to take a deeper look. And the answer is they're doing fine, if not jumping through hoops like that PR-crafted headline would have you believe. Let's peek at two tables from the most recent fiscal report:





The first table shows the results for the Party Poker portion of the business, still the mainstay, while the second shows the results for the Party Casino portion of the business. The two are combined to show the "54% gain" result trumpeted in the headlines. In truth, the poker portion of Party's operations shows a rise (over the same quarter in 2005) of $2.26 to $2.87 million in average daily revenue, a gain of 23%. It's the much-smaller gaming division --- bingo, online slots, the upcoming online backgammon and the rest --- that made the huge jump and carried the quarter for Party. That part of the business rose from $0.13 to $0.92 million in daily revenues over the span of the year, a whopping 637% surge.

Of course, when you're crafting a release for the POKER market, you grab the highest figure that includes the poker. Ergo, 54%, not 23%.

Further examination indicates that most of Party's remaining poker growth is coming from its expanding European presence, not its traditional American base. Here's a telling quote: "Over 39% of new real money sign-ups in the quarter came from countries outside the U.S. whilst in March, the proportion of new real money sign-ups coming from outside the U.S. exceeded 40% for the first time."

No surprise there. So let's put it all into perspective.

Given just how many new online poker rooms there are to choose from, it's a bit of a surprise to see that Party's results are as good as they are. That said, it's clear that the U.S. market is showing signs of plateauing. The U.S. poker market is still growing, but it's being outpaced by newer overseas markets. This is as it should be.

The sky's not falling for poker, nor is likely to any time soon. We're due to see some consolidation of poker rooms and interests, but we're also going to see many more rooms in the months and years ahead. Plateau or not, online poker remains a land of opportunity.