The Guardian reports that Party Gaming shares plunged a further 13
percent Monday after analysts suggested its exit from the US on Friday
in the face of new anti-online gambling legislation may have wiped
up to 90 percent off revenues from the online operator's PartyPoker
business at a stroke.
Investor fears of a collapse in player numbers and liquidity on PartyPoker.com
were exacerbated by the group's decision to remove from the site a
ticker informing visitors of the number of virtual tables in use and
the number of players currently online.
Comparing Saturday night's poker traffic with a week earlier, Ivor
Jones, of Panmure Gordon, said: "Our very tentative estimate
would be that rake and tournament fees would have been down more than
80 percent ... real money play appears to have picked up sharply at
the poker sites which have said they intend to continue to operate
in the US."
PokerStars, the Israeli-owned private company that has signaled its
intention to continue in the US, has begun an aggressive recruitment
campaign to capitalize on the exodus of rivals. In an almost unprecedented
promotion, it is offering to double cash in new players' accounts
when they sign up. If it has not done so already, the Isle of Man-licensed
PokerStars is shortly expected to overtake PartyGaming as the the
world's largest poker operator.
Over the weekend, the site hosted a record number of players in its
regular tournament action (see earlier InfoPowa report).
A spokesman for PartyGaming, which until Friday generated three-quarters
of revenues in the US, said the player and table number tickers had
been removed because it did not want rival operators to use this information
against it.
"We have taken the counters down temporarily. We are not
going to give it on a plate to our competitors." He warned
against extrapolating a longer trend from week-on-week comparisons
on player numbers.
The management is expected to give its view when PartyGaming reports
its third-quarter numbers later this week.
Julian Easthope, a UBS analyst, said: "Liquidity drives
revenues and Party will likely lose its market lead position."
Retaining small players is vital to attract big-pot regulars. Operators
typically generate 70 percent of revenues from just 30 percent of
players.
PartyGaming shares fell 4.5p yesterday to 30p - a quarter of the flotation
price. Yesterday, PartyGaming had a market capitalization of GBP 1.2
billion.
Update: Party's recent action of halting the public on-site
display of numbers of players online and tables in action apparently
has not hampered further analyst tests, this time carried out by Dresdner
Kleinwort, which this week claimed that Party Poker has “....maintained
a strong position alongside PokerStars as the second most liquid poker
site in peak European playing time."
Party’s still strong liquidity in the fast-growing European
market provided it with a significant base from which it could cross-sell
and acquire customers, said the broker.
The liquidity levels were tested on 16 October by DrKW to compare
with those of other leading poker rooms. The results were broadly
in line with expectations, DrKW said.
“Overall, PartyPoker has maintained a competitive liquidity
advantage over the majority of its peers. PokerStars has, however,
unsurprisingly managed to overtake it as the largest poker site in
both US and European peak times”, it said.
As a result, DrKW retained its 2007 revenue forecast of US$454 million
for Party, “...although it remains early stages," it said.
Tests were performed on the total number of active cash game players,
the spread of active cash games by blind structure and an overview
of peak active player numbers.
Tests results from Dresdner were as follows:
Test 1: At 0750 GMT PRTY's market share in our universe was low as
expected but still 10 percent. However, as European customers entered
the site, its share rose significantly to 17 percent and actually
overtook PokerStars between 1300-1700 GMT. By 2100 hrs GMT, as US
players joined US-facing poker rooms, PRTY's relative market share
began to fall from its peak of 17 percent to 15 percent by 2100 hrs,
although still roughly double the third largest site, Full Tilt Poker.
FTP still accepts US business.
Test 2: Peak playing numbers (again cash games) during a 24-hour period
have fallen from roughly 14,000 to ca. 7,000 on PartyPoker. Given
that the new peak represents the old low, our estimate of a ca. 70-75
percent drop in revenues is consistent with this trend.
PokerStars.com regular Sunday Million tournament set a new participation
record, whilst PartyPoker.com cancelled its Sunday Million tournament
in the first weekend after the Unlawful Internet Gambling Enforcement
Act (UIGEA) became law.
PokerStars saw a record 6 157 players Sunday while Full Tilt drew
a hefty 1 127 players for their monthly $500 000 guaranteed tourney.
Even UltimateBet, the smallest fish in the big Sunday tournament pond,
saw numbers on par with their regular showing, drawing a respectable
896 entrants for their $200 000 guarantee.
PartyPoker, the only online poker room hosting a major Sunday tournament
to stop accepting American players, did not hold their most popular
tournament for only the third time since June 4th. The company fell
409 players short of their typical Sunday Million guarantee figures,
resulting in an overlay or more than $80 000. This figure is perhaps
a good indication that one of the most popular weekly events could
be in trouble.
The Sunday Million tournament could be in limbo, because it seems
that Party Poker may have trouble clearing its million-dollar guarantee
without American players, reports Casino City. PartyPoker failed to
respond to multiple emails on the topic. The poker room also cancelled
the multiple satellite tournaments that feed players into the Sunday
Million.
PartyPoker's competitors should acquire most of the 5,000 weekly players
who normally play in the PartyPoker Sunday Million, said Ryan Peck,
Media Director for InternetTexasHoldem.com, a site that tracks players
and performances in major online tournaments.
"Players are going to play," Peck said. "They'll simply
seek out other affiliates that have remained U.S. player friendly,"
Peck said.
Even before President Bush signed the UIGEA into law last Friday,
the proposed anti-online gambling measure had an impact on Sunday
tournament participation levels. In the week after Congress passed
the act, PokerStars, Full Tilt and UltimateBet saw stronger or similar
participation numbers similar or better to those experienced before
the law's passing, according to a Casino City analysis. All three
sites announced plans after the UIGEA's passing to continue accepting
American players.
PokerStars drew a near-record 5 501 players for their $1 Million guaranteed
on October 8, cementing their presence as the Sunday-tournament leader.
On the same day, Full Tilt saw their second highest total when 1 336
players entered their $250 000 guarantee. UltimateBet did not meet
their goal, drawing only 876 players. But that total was better than
their October 1 showing of 820 and similar to their September numbers.
"Most definitely the legislation has played a huge role in recent
PartyPoker overlays," Peck said. "PartyPoker reacted very
swiftly to the Congressional passing of the Unlawful Online Gambling
Bill and shut out U.S. players indefinitely. This has skewed the number
of entrants in an adverse fashion. (The Sunday Million averages generally
over 5,000 players and last Sunday, following the bill, less than
4 600 played."
The Sunday tournaments became a staple on the major poker sites when
PokerStars announced plans this spring to hold a weekly million-dollar
guaranteed tournament. PartyPoker followed suit on June 4, unveiling
their version of the Sunday Million.
Full Tilt offers a Sunday $250 000 guarantee that averages around
a 1 000 players a week. Their participation numbers have grown steadily
over the summer, allowing the site to bump their original $200 000
guarantee to the current mark.
UltimateBet completes the weekly big-four offering, running a $200
000 Sunday Guaranteed that averages around 850 players.
All four tournaments saw player-participation spikes during and after
the WSOP. Large advertising campaigns by PartyPoker, PokerStars and
Full Tilt translated into prize pools well above guaranteed money.
PokerStars is the clear leader in Sunday tournaments. In August, the
PokerStars Sunday Million tournament's prize pool totaled $3 575 300
- $500 000 more than the guarantee.
The only time PokerStars missed their guarantee in this survey was
on Father's Day.
PartyPoker's numbers followed a similar trend. After missing their
guarantees on July 2 and July 9, PartyPoker went on a run during and
after the WSOP, surpassing their guarantee for seven-straight weeks.
In three August tournaments, PartyPoker's Sunday player's created
a prize pool of $3 258 000, more than $250 000 over the guarantee.
PartyPoker matched the WSOP boost seen at PokerStars, drawing their
second and third largest entry totals on Aug. 13 and Aug. 27.
Similarly, Full Tilt and UltimateBet saw large August increases. Full
Tilt's participation rose so quickly that month that they held a $400
000 guarantee on Aug. 20. A tournament record 1 468 players competed
for almost $500 000 in prize money.
Peck said he expects that other sites will enter the Sunday tournament
arena, offering large-guarantee tournaments to attract American players.
Adding to the woes of US player-unfriendly sites, the online gambling
portal Gambling911 reported this week that current Alexa rankings
(an indication of traffic flow to websites) have shown that Titan
Poker (which bans US players) traffic has declined whilst PokerStars
and Bodog (both still doing US business) have increased.
Titan ranking fell from a three month average ranking at just over
8000 to this week's average ranking of 12000. Full Tilt Poker went
from a monthly average ranking of 12 000 to just over 7 000. Bodog.com
went from a three month average of just over 5 000 to averaging just
over 4 000. PokerStars took a dramatic leap upon finally confirming
they have no intention on leaving the US market. Their three month
average was around 9 000 and this week was 4 895.