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PartyGaming Cancels Dividend to Focus on Acquisitions
PartyGaming, the world’s largest online gambling company, announced this week it plans to cancel its October 31 dividend payment following the US Senate approval of the anti-gambling bill.
The Gibraltar-based online gambling giant announced in a statement: “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” and that it would review its dividend in “due course”.
Shares of PartyGaming Plc plummeted following its announcement that it planned to stop accepting wagers from its 900,000 US customers. PartyGaming is the parent company of the largest online poker room in the
world (Party Poker) as well as Party Casino, for which they had planned a massive marketing drive in the US prior to the shock developments last week in the Senate.
President Bush is expected to sign the anti-gambling bill into law within the next few weeks. The framers of the bill hope the new law will effectively prevent US-based residents from using credit cards, wire transfers and checks to deposit and withdraw funds from their online gambling accounts. Analysts have estimated up to 60% of the worldwide gambling industry revenue is derived from the US, and the announcement of the Senate ratification put the market into freefall early this week.
Mitch Garber, CEO of PartyGaming, expects his company to focus heavily on buying up companies that bear the brunt of the new legislation. The Financial Times reported Garber as saying: “We are very focused on mergers and acquisitions.”
It remains to be seen whether the online gambling industry will be able to recover from this “bad beat” in the medium term.