Share Name Share Symbol Market Type Share ISIN Share Description
Partygaming Plc LSE:PRTY London Ordinary Share GI000A0MV757 ORD 0.015P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 193.40p 0.00p 0.00p - - - 0 05:00:10
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Travel & Leisure 306.5 37.6 8.1 23.6 798.87

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Date Time Title Posts
16/11/201109:30Let's get this Party Started15,878
03/2/201111:59 *** Partygaming ***1
11/8/201008:52BINS PARTY 100P196
14/8/200921:44 BetOnSports Founder Pleads Guilty..why bow down to a bunch of crooked YANKS?1
24/7/200917:10PartyGaming and Cashcade acquiistion1

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Partygaming Daily Update: Partygaming Plc is listed in the Travel & Leisure sector of the London Stock Exchange with ticker PRTY. The last closing price for Partygaming was 193.40p.
Partygaming Plc has a 4 week average price of - and a 12 week average price of -.
The 1 year high share price is - while the 1 year low share price is currently -.
There are currently 413,065,372 shares in issue and the average daily traded volume is 0 shares. The market capitalisation of Partygaming Plc is £798,868,429.45.
frauchi10: Barclays said that a regulation passing sports betting only in Germany, coupled with taxation on UK revenues, is the current bear case on PRTY. Barclays estimates that PRTY would lose ca. 40% of German clean EBIDTA (20-25& of total EBITDA) in the short term. This would result in 2012E clean EBITDA of ca. EUR 64 Mio. At least this would bring regulatory certainty in PRTY's key market. Over the past 3 years PRTY has traded on average 9.9 x 1 year forward EV/EBIDTA multiple and with regulatory clarity Barclays expect the stock to trade on 9-10x EV/EBITDA. This would lead to a potential share price of 137p or a 25% downside. Possible German regulatory scenarios and impact on PRTY's profitability Status quo - No change Denmark style regulation - Short-term diclines, medium-term growth France sytle regulation - ca. 20-25% clean EBIDTA decline Sportsbetting only - ca. 35% clean EBIDTA decline
jezza123: Well had a look at BWIN vs PRTY share price over the last 6 months - (since the end of July announcement of the merger) BWIN down -37.6% PRTY down - -39.22% So the arb would be making you money. the question really is, how will the new share price be calculated when the merger happens and the new company is formed (I note BWIN share holders will own more of the company) Anyone?
gsands: Re. PRTY share price. Path of least resistance seems to be up at the moment. A retest of 285 looks imminent. From there (assuming the market holds) we should break out to c320p as technical traders buy the breakout.
outsourcer: what the f@ck is going on with PRTY share price of late ? thought I done well to get back in around 245p and now we are in the 230's
richaims: superjas, Many thanks for your response. I was aware of the Q1 KPIs next week from the RNS but the subsequent share price fall of today concerns me. I agree with what you say about poker. I also agree casino is looking very good - it is casino that makes me so bullish about NPT. If the PRTY share price falls again tomorrow, I've more or less decided to sell at least some of my PRTY shares and I'll also probably be stop lossed out of my PRTY spread bet positions. I can always buy back next Tuesday ! rich.
richaims: Whereas I remain bullish about the gaming sector which should thrive in this recession, I'm getting increasingly nervous about those companies with large exposures in the fiercely competitive poker sector. As a consequence, I have sold half my 888 holdings and put more into NPT which does not do poker, is in my opinion undervalued and which in my opinion has far more potential for share price growth. I'm wondering whether to do the same with my stake in PRTY. The continuing share price fall (down another 7.28% today) worries me and I'm losing confidence in the short term potential for growth in the PRTY share price. It all seems too risky to remain invested in these shares. Any thoughts as to whether I should sell at least part or not?
srpactive: talking about online gambling on cnbc, says massive massive upside of the prty share price if they regulate in the US, and spoke about barney frank pushing for it once you hear them talking about it, it is going to happen imho. dyor regards active
guidfarr: I have nothing to hide bought around 10,000 of these at average of 1.85 (paid full for long term holding) and another 5000 at 1.30 which are intended for a short term trade until at least the results. No I haven't bought these at 2.50! before i even had a pairs trade to get the economic climate out of the way - long prty short 888 which worked but which i closed earlier than i should! I'm not going short at 105.75 on 888 (that i feel would be crazy as 888 generates great profits!!) even though i believe prty is still very much undervalued compared to 888. this business is all about about poker numbers and website traffic and future expectations - website traffic has always been good, poker numbers weren't that good but are improving and future expectations are looking brighter than ever. Consolidation i know wouldn't do the company good which is why i got out at the time when prty was trading at 28p. But as usual immediately after the consolidation the market behaved irrationally - it behaved perhaps in a predictable way to cause the most damage to the biggest number of traders - probably quite a few shorters got burnt when they tried to short it as the price moved up for a while. But if you think this retracement is still about the effect of consolidation you are wrong. Look at 888 and sportingbet both are heavily down without a consolidation. The share price may remain low for sometime and may even get lower but expect it to go over 250+ solid within a years time. What seems to be hurting prty share price is lack of interest and poor liquidity in the market place - it seems that even the number of market makers quoting level 2 on prty are only some 4 now? - there used to be more no? I'm confident that as soon as they announce a solid trading update this will spike up. Add to that that prty have changed the CEO and reduced staff to rein costs which was very effective for sportingbet's profitability i remain bullish! Would i want to own party at the moment? YES! and i've voted with my money! So i remain bullish on prty compared to the uk economy. Perhaps time to enter a pairs trade on prty against the FTSE250 or FTSE All Share if that's possible? Of course this is just my opinion here and I could be wrong (DYOR) but at least i back my reasoning with my beliefs - i've been working in the industry for quite sometime - my disadvantage is not being based in the UK so i don't know how much promotion partygaming are doing offline really? When i was in London i know that 888 was plastered everywhere though! I just logged in the prty's poker client and got this greeting - all the pointers are looking good for me! In the past prty poker reward points was changed which drove quite a bit of players to leave prty now I believe they are getting it back to what it was 'You spoke, we listened Our new reward plan launches in December. In the meantime, you'll get your points at 100% of their value as soon as you go past your Weekly Goal, so start playing now ' wish they would launch live chat support - instant gratification is the name of the game! peter119 for curiosity's sake what shares are you holding at the moment?
guidfarr: I disagree - with no shorting market makers wouldn't be able to short sell you shares (i.e. make a market) - its already ironic that the prty share price is suffering from liquidity (lol when you compare it to the player numbers) if market makers wouldn't be able to short it would be all hell loose.
handsome: I've got it.... Sector update 15 April 2008 The business of gambling Why has the form book been thrown out of the window? Equities research Leisure & Travel | Europe Please refer to the Disclosure Appendix for all relevant disclosures and our disclaimer. Dresdner Kleinwort Securities Limited, authorised and regulated by the Financial Services Authority and a Member Firm of the London Stock Exchange. PO Box 52715, 30 Gresham Street, London EC2P 2XY. Telephone: +44 20 7623 8000 Telex: 916486. Registered in England No. 1767419. Registered Office: 30 Gresham Street, London EC2V 7PG. A Member of the Dresdner Bank Group. Bloomberg: DKIB1 Online research: Research Analysts Andrew P Lee +44 (0) 20 7475 5204 Tim Ramskill, CFA +44 (0)20 7475 6278 Alistair Scobie +44 (0)20 7475 7230 Ed Birkin +44 (0)20 7475 6874 Ben O'Toole +44 (0)20 7475 1176 The market's pricing of gambling stocks seems to have thrown the form book out of the window, providing high potential rewards for low risk, in our view. In simple terms, we believe the market has applied too great a weighting to downside risks and overlooked the habitual nature of gambling, its relative resilience, strong cash generation, high margins, high barriers to entry and secular growth online. ► Analysing recent form: The form guide of our gambling universe reports a disappointing last six to nine months in terms of share price performances, some earnings downgrades and a spate of negative newsflow. Combined with the general market weakness, it is not surprising, therefore, that overall total shareholder returns have been negative over this period. ► Form is temporary, class is permanent: But much of the sector's recent poor share price form has been impacted by the market's incorrect extrapolation of short-term issues into longer-term trends (H2 2007 unfavourable football results, Turf TV, machines). Significant pent-up demand for gambling exists, particularly in Europe and Asia, and our universe of market-leading gambling stocks is in a strong position to capitalise on this growth. ► Consolidation online provides lower risk and high rewards: On a standalone basis, we believe our online universe is significantly undervalued so the potential upside from consolidation is effectively a free option. Historically, M&A activity in the sector has been materially earnings enhancing and we estimate the following potential PAT uplifts in 2010 from the possible combinations: PRTY/BWIN: 42%, SBT/BWIN: 50% and PRTY/WMH: 31%. ► Clues from the stable?: Recent dealings in shares by directors have seen purchases from executives and non-executives in LAD, PRTY, RNK, SBT and WMH. ► The low ratings belie the sector's historic form: Our universe of nine gambling stocks trades on a 2008E P/E of 13.2x falling to 11.7x in 2009E. Whilst the consumer and travel & leisure sector outlook remains uncertain, William Hill (8.9x 2008E P/E), PartyGaming (10.5x) and Sportingbet (8.8x) stand out and offer the greatest upside potential and relatively limited downside risk without the need for earnings upgrades. ► Pair trades: William Hill's 29% 2008E P/E discount to Ladbrokes seems unjustified although this narrows to 17% on an EV/EBITDA basis. 888's 54% 2008E P/E premium to PartyGaming seems unwarranted given the gross win growth track records. Valuations Mkt cap P/E x EV/EBITDA x Div yield % £m 2008E 2009E 2008E 2009E 2008E 2009E Rec. 888 Holdings 508 16.2 14.6 13.2 11.4 3.2 3.5 Add bwin 566 14.5 10.6 6.4 4.6 - - Add Ladbrokes 1,946 11.5 10.4 8.5 7.7 4.9 5.3 Buy Lottomatica 2,525 15.0 13.2 7.2 6.8 3.9 4.0 Sell Paddy Power 856 16.4 14.8 9.8 8.5 2.5 2.8 Buy PartyGaming 830 10.5 8.7 8.0 6.1 - - Buy Rank 352 20.1 20.2 8.8 8.7 2.5 2.5 Sell Sportingbet 207 8.8 7.1 6.5 4.8 - - Buy William Hill 1,337 8.9 8.3 8.1 7.6 6.5 6.8 Buy Gamblers 9,127 13.2 11.7 8.3 7.4 3.6 3.8 Source: Dresdner Kleinwort Research estimates Overweight Unchanged Buy Ladbrokes Paddy Power PartyGaming Sportingbet William Hill Add 888 Holdings bwin Sell Lottomatica Rank The business of gambling 15 April 2008 The business of gambling 15 April 2008 3 Introduction Two-thirds of our gambling universe stocks have outperformed the DJSTOXX – Travel & Leisure index since the peak. But given the relatively defensive nature of gambling, driven by its habitual and low ticket price nature as well as secular growth online, we still believe the market has de-rated the subsector far too aggressively. As such, significant upside potential exists for several stocks, in our view, and we maintain our Overweight subsector stance. Top picks are William Hill, Paddy Power, PartyGaming and Sportingbet. Share price performance since peak We set out the performance of our universe of travel & leisure stocks in the table below: Leisure universe TSR since peak (23 May 2007) and 2008 YTD Since peak (23 May 2007) 2008 YTD 888 Holdings 27% Dominos Pizza 25% Paddy Power 0% Compass 9% FTSE100 (11%) Clapham House 8% Compass (11%) Millennium & Copthorne 7% Carnival (20%) Thomas Cook 7% Dominos Pizza (20%) 888 Holdings 5% Ladbrokes (21%) Cineworld 4% Tui AG (22%) Paddy Power 0% Holiday Break (28%) Ladbrokes (0%) Sodexho (29%) Rank (1%) Accor (30%) Sodexho (6%) Sportingbet (30%) Tui Travel (7%) Carluccios (30%) FTSE100 (9%) Cineworld (31%) Carnival (9%) Bwin (32%) Intercontinental (9%) Lottomatica (35%) Tui AG (11%) NH Hoteles (36%) Accor (11%) DJSTOXX - Travel & Leisure (39%) Holiday Break (12%) William Hill (40%) Carluccios (13%) Whitbread (41%) NH Hoteles (15%) Millennium & Copthorne (41%) Enterprise Inns (15%) Intercontinental (41%) Lottomatica (17%) Enterprise Inns (44%) The Restaurant Group (18%) Greene King (49%) Sol Melia (18%) PartyGaming (51%) Bwin (18%) Sol Melia (53%) DJSTOXX - Travel & Leisure (19%) Clapham House (54%) Whitbread (20%) Marstons (54%) JD Wetherspoon (22%) JD Wetherspoon (54%) Mitchells & Butlers (22%) The Restaurant Group (54%) Punch (22%) Prezzo (55%) Prezzo (23%) Rank (56%) Sportingbet (25%) Punch (57%) William Hill (27%) Luminar (57%) Regent Inns (28%) Mitchells & Butlers (62%) PartyGaming (28%) Regent Inns (86%) Greene King (29%) Thomas Cook NM Marstons (35%) Tui Travel NM Luminar (37%) Source: RIMES Given the habitual and low ticket price nature of gambling as well as the continued secular growth online, it is not that surprising to us that the only two stocks in our travel & leisure universe to outperform the FTSE100 in the current consumer-averse market environment are gambling stocks. However, we are surprised that there has been such a discrepancy between individual stocks. William Hill, for example, is down 40% versus a 21% decline for Ladbrokes whilst 888 has risen 27% versus PartyGaming's fall of 51%. The business of gambling 15 April 2008 4 Total shareholder returns from our gambling universe are set out in the chart below: Earnings revisions and rating changes Earnings momentum and assumptions surrounding varying degrees of risk by stock have undoubtedly played a major part in these incongruous share price performances. We therefore analyse to what extent share price performance has been driven by changes to earnings forecasts or ratings in the charts below: We note the following: ► The whole subsector has been de-rated by between 0-52% ► Only 888 has delivered a positive absolute return over this period with both Rank and PartyGaming down 50% or more ► There have been no downgrades to thee of our four online gambling stocks – the share price declines for these stocks have been driven entirely by a de-rating ► The level of de-ratings has been significantly greater as a whole than actual forecast downgrades implying the market expects further significant downgrades in our view We believe this market reaction has been overdone for several reasons including: ► Gambling is relatively resilient in a downturn (habitual, low ticket price, secular online growth of over 20%) ► The gambling sector was already trading at a P/E discount to the leisure sector prior to its peak. Whilst it has been de-rated relatively less than the sector overall, none of our gambling universe has any material freehold property and five of our nine stocks (onliners and Paddy Power) have no debt and, overall, we believe it should have been de-rated by significantly less than it has been TSR since leisure sector peak, 23 May 2007 (%) -70.0% -60.0% -50.0% -40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% Rank PartyGaming William Hill Lottomatica bwin Sportingbet Ladbrokes Paddy Power 888 Source: RIMES Forecast revisions since 23 May 2007(%) -60% -40% -20% 0% 20% 40% Rank bwin William Hill Lottomatica Ladbrokes PartyGaming Sportingbet Paddy Power 888 Source: Dresdner Kleinwort Research estimates P/E rating change since 23 May 2007 (%) -60% -40% -20% 0% 20% 40% PartyGaming Rank Sportingbet William Hill Lottomatica Ladbrokes Paddy Power 888 bwin Source: Dresdner Kleinwort Research estimates The business of gambling 15 April 2008 5 None of the above stocks have mentioned to date any impact of a weakening consumer on current trading nor have they been cautious about the outlook. This is in stark contrast to other consumer-facing subsectors. In addition, stocks such as Ladbrokes, William Hill and Lottomatica have highlighted the historic resilience of trading during previous downturns. Sector ratings Out of our four top picks, PartyGaming, William Hill and Sportingbet currently trade on the lowest 2008E P/E ratings out of our universe of gambling stocks. Combined with this, William Hill offers an attractive 6.5% dividend yield. Stock ranked by P/E, EV/EBITDA and yield 2008E P/E x 2008 EV/EBITDA x 2008E Yield % Domino's Pizza 22.7 Domino's Pizza 16.0 Luminar 7.9 Clapham House Group 22.1 888 Holdings 13.2 Cineworld 7.2 Rank 20.1 Enterprise Inns 11.1 William Hill 6.5 Carluccios 18.0 NH Hoteles 10.2 Holidaybreak 6.4 Paddy Power 16.4 Punch Taverns 9.9 Marston's 6.1 888 Holdings 16.2 Paddy Power 9.8 The Restaurant Group 5.3 Accor 15.9 Millennium & Copthorne 9.6 Ladbrokes 4.9 Compass 15.9 Carnival 9.5 JD Wetherspoon 4.7 NH Hoteles 15.4 Clapham House Group 9.3 Carnival 4.3 Intercontinental 15.1 Intercontinental 9.1 Mitchells & Butlers 4.2 Sodexo 15.1 Carluccios 9.1 Thomas Cook Group 4.2 Lottomatica 15.0 Marston's 8.8 Accor 4.1 bwin 14.5 Mitchells & Butlers 8.8 Greene King 4.0 Millennium & Copthorne 14.3 Rank 8.8 TUI Travel 4.0 Sector average 13.3 Greene King 8.7 Lottomatica 3.9 Whitbread 13.0 Ladbrokes 8.5 Enterprise Inns 3.8 Carnival 12.7 Sector average 8.3 Sector average 3.6 TUI Travel 12.6 Compass 8.3 Compass 3.5 Mitchells & Butlers 11.8 William Hill 8.1 Sodexo 3.5 Prezzo 11.7 PartyGaming 8.0 Whitbread 3.2 Ladbrokes 11.5 Accor 7.7 888 Holdings 3.2 Thomas Cook Group 11.3 Sodexo 7.3 NH Hoteles 3.1 JD Wetherspoon 10.9 TUI AG 7.3 Intercontinental 2.8 TUI AG 10.7 Lottomatica 7.2 Punch Taverns 2.6 Enterprise Inns 10.5 Whitbread 7.1 Rank 2.5 PartyGaming 10.5 Sol Melia 6.9 Paddy Power 2.5 Cineworld 10.0 Sportingbet 6.5 Domino's Pizza 2.4 The Restaurant Group 9.8 TUI Travel 6.4 Millennium & Copthorne 2.4 Sol Melia 9.7 bwin 6.4 Sol Melia 2.3 Holidaybreak 9.6 Cineworld 6.2 Carluccios 2.0 William Hill 8.9 JD Wetherspoon 6.0 Prezzo 0.5 Sportingbet 8.8 Holidaybreak 5.8 bwin 0.0 Marston's 8.5 Prezzo 5.5 PartyGaming 0.0 Greene King 8.5 Thomas Cook Group 5.1 Sportingbet 0.0 Punch Taverns 7.7 The Restaurant Group 5.1 TUI AG 0.0 Luminar 6.4 Luminar 4.7 Clapham House Group 0.0 Regent Inns 5.8 Regent Inns 4.5 Regent Inns 0.0 Source: Dresdner Kleinwort Research estimates In the following sections, we focus on the bookmakers (Ladbrokes, Paddy Power and William Hill) and the online gamblers (888, bwin, PartyGaming and Sportingbet) which is where we believe the largest share price anomalies exist. Stock recommendations and target prices Recommendation Current price Target price TP upside 888 Holdings Add 150 155 3.7 bwin Add 21.7 27.0 24.3 Ladbrokes Buy 314 390 24.2 Lottomatica Sell 20.9 19.5 (6.7) Paddy Power Buy 22.3 32.0 43.8 PartyGaming Buy 21 55 165.1 Rank Sell 90 75 (16.7) Sportingbet Buy 40 80 102.5 William Hill Buy 382 630 65.1 Source: Dresdner Kleinwort Research estimates, Bloomberg The business of gambling 15 April 2008 6 Bookmakers Industry and stock-specific newsflow surrounding Ladbrokes and William Hill has been particularly unfavourable in the last six to nine months, which, combined with general market turbulence and uncertainty, has led to material share price declines of both stocks. We believe that the impact has been overdone with the market incorrectly penalising both stocks by de-rating them for issues that are largely one-off in nature (unfavourable sports results, Turf TV), unlikely to materialise (machines issues) or misunderstood (Ladbrokes Nov 2007 trading update). We see significant value, particularly in William Hill (2008E: 8.9x P/E, 6.5% dividend yield, 10% FCF yield, 3.4x fixed charge cover). Is the spate of negative news flow now over? Ladbrokes and William Hill have suffered from a run of negative newsflow effectively since the resignation of David Harding in the middle of 2007. The market reaction to this newsflow has been overly negative with a significant de-rating of these stocks where this was not appropriate, in our view. We attempt to disentangle the various pieces of newsflow below: ► Changes in the macro-economic and UK consumer outlook and impact on gambling stocks ► Ladbrokes negative trading update on15 November 2007 ► Machines regulation ► Turf TV ► Unfavourable results in H2 2007 ► Online division downgrades in both WMH and LAD for separate reasons ► Resignation of David Harding and significant lead time to find a replacement CEO All of the above have contributed to negative sentiment surrounding the bookmakers and some of them have led to downgrades to our forecasts. The question is whether the derating that has taken place is justified or overdone. We discuss each of the above in more detail below: Changes in the macro-economic and UK consumer outlook Whilst the de-rating of the market overall and consumer-facing stocks in particular, has not been surprising given developments since mid-2007, the de-rating of Ladbrokes and William Hill seems excessive for several reasons: ► The vast majority of shops are on operating leases and hence neither company had a freehold property premium factored into their share prices. ► Gambling is relatively more resilient given the habitual nature of gambling and the fact it is a low ticket price item. Not one of our universe of nine gambling-related stocks has so far reported any impact of the weakening macro-economic environment on consumer gambling spend. William Hill, in particular, "remains confident in the prospects for .... the Retail Channel" (27 Feb 2008) and the CEOs of both Ladbrokes and William Hill remarked on the resilience of their businesses in previous downturns at their respective 2007 preliminary results analyst presentations. ► The operational and financial leverage of both companies is relatively low, as demonstrated by its favourable comparison to Next, for example, which is arguably a 'best in class' UK retailer in terms of operational metrics. General UK retailers overall have higher operational and financial gearing with industry average EBIT margins of 10% and fixed charge cover of just 1.9x: The business of gambling 15 April 2008 7 2008E metrics William Hill Ladbrokes Next EBITDA margin % 31.0 30.8 18.3 EBIT margin % 26.7 25.3 14.7 Interest cover x 4.3 4.1 10.9 Fixed charge cover x 3.4 3.4 3.5 PAT margin % 18.7 15.6 9.6 Dividend cover x 1.73 1.76 2.8 Dividend yield % 6.8 5.1 4.9 P/E x 8.6 11.2 7.2 Source: RIMES, Dresdner Kleinwort Research estimates Both Ladbrokes and William Hill, in particular, already traded at a significant discount to the sector overall prior to the market's decline. At the peak of the leisure sector (23 May 2007), Ladbrokes traded on a 2008E P/E of 14.4x and William Hill 12.7x versus a sector average of 17.6x. Since the peak, the leisure sector has been de-rated by ca. 32% with Ladbrokes de-rating 20% and William Hill 29%. For these relatively defensive and highly cash generative businesses, with no freehold property premium or highly leveraged balance sheets, to be de-rated the same extent as other consumer-related stocks seems disingenuous to us and we believe that the market has materially over-exaggerated the potential downside risk to the operational performance of both companies. DKIB view: Market overreaction Ladbrokes negative trading update on 15 November 2007 On 15 November 2007, Ladbrokes announced its trading update for the four months ended 31 October 2007. As we stated in our note on 21 November 2007, "LAD's trading update: mainly structural issues or one-offs?", we believe this update was particularly misleading and poorly worded with the statement failing to adequately highlight the significant number of moving parts in the business over that four month period, namely AMLD in July, prior year World Cup impact, unfavourable results, initial impact of smoking ban, unusually high race meeting cancellations, initial cost impact of 10% extra opening hours and international retail development costs. Bookmaker's P&Ls are volatile under normal circumstances over short period of time, let alone with this number of moving parts. Nevertheless, the market reacted particularly savagely to this trading update, and factored a significant weakening in the retail division into the share price of both LAD and WMH. The share prices of both stocks have not recovered from this misleading statement despite the fact that Ladbrokes reported a 10.6% increase in retail gross win in the final quarter, with OTC rising 1.2% despite a 33.6% rise in machines – hardly the performance of a division in terminal decline! DKIB view: Market overreaction Machines regulation The issue of problem gambling and machines reared its ugly head again in early 2008, much earlier than we expected post the Prevalence Study, which appeared to temporarily resolve the market's issue with machines. We believe that the market continues to misunderstand the machine issue and that, in fact, the threat to machines is limited for the following reasons: ► The growth of machines is naturally an easy target for the anti-gambling factions of the press and society overall. It is not surprising, therefore, that the government wishes to be seen to be actively monitoring the development of these products, which it has done so since their inception in 2001 through GamCare, the introduction of the Code of Conduct and ongoing reviews. The latest government decision to review machines is therefore not unprecedented and should not automatically be assumed to have negative implications. The business of gambling 15 April 2008 8 ► The 2007 Prevalence Study concluded that there had not been an increase in problem gambling since 1999. Within that, however, spread betting, betting exchanges and FOBTs had the highest relative level of problem gamblers. On an absolute basis, however, there were more problem gamblers involved in the National Lottery, scratchcards, slot machines (excl. FOBTs) and horse racing than FOBTs. The importance of the absolute measure is that any adjustment or removal of FOBTs would have virtually no impact on the number of problem gamblers as these gamblers would simply seek an alternative product on which to gamble: ► FOBTs make a significant contribution to government coffers. The size of the FOBT market is estimated at approximately £1bn per annum. We estimate that this generates over £350m per annum in incremental taxes for the government through VAT (£150m), AMLD (£60m) and corporation tax (£150m). Any change to the number of machines, stakes or prizes would, therefore, negatively impact government tax income, without actually addressing any problem gambling issues as highlighted previously. ► Probably the biggest card the bookies hold, in particular, William Hill, is the threat of moving its telephone and online operations offshore. We estimate that if William Hill were to move its online and telephone operations offshore, the result would be a saving in GPT, levy and corporation tax of ca. £35m, or just under 25% of our current forecast 2008E PAT. WMH – potential duty, levy and tax savings by moving offshore 2008E 2009E Telephone gross win 53.9 54.4 Online gross win 120.7 129.4 174.6 183.8 GPT saving Telephone 8.1 8.2 Online (sports only) 5.3 5.9 13.4 14.1 Levy saving (horse racing only) Telephone 2.7 2.7 Online 0.8 0.9 3.5 3.6 Corporation tax saving Telephone 4.5 4.5 Online 13.8 15.3 18.4 19.8 Total saving 35.3 37.5 Source: Dresdner Kleinwort Research estimates DKIB view: Market overreaction Absolute number of problem gamblers in Prevalence Study survey population 8.0 8.4 9.6 15.9 17.0 18.9 19.4 19.6 20.2 20.7 22.0 23.9 24.8 31.0 31.1 48.0 Betting exchanges Spread betting Football pools Online gaming Table casino games Bingo Online betting Private betting Another lottery Other LBO products Dog races FOBTS Horse races Slot machines Scratchcards National Lottery Source: The Prevalence Study 2007 The business of gambling 15 April 2008 9 Turf TV ► The resolution to the Turf TV issue added a further £12-13m in costs for both LAD and WMH. The question is whether this is a one-off hit to profit or whether there are potential further costs issues surrounding horse racing or other sports content that warrants a de-rating. ► With regards to horse racing, the deal with Turf TV is a five-year deal with the 31 courses and as such, costs should be under control during this time. Of the remaining 28 courses that are not yet signed up to Turf TV, most remain contracted to SIS until 2011. At that time, we believe any incremental amount to be paid by the bookmakers for these courses will, in our view, be negligible, driven by the fact that these courses are less important relative to the courses already signed up and the costs will be offset by the costs already being paid to SIS, although admittedly this is an unknown. Courses by pictures supplier Turf TV SIS Aintree Ludlow Ayr Plumpton Ascot Market Rasen Bangor Ripon Ayr Mussleburgh Bath Sedgefield Bangor-on-Dee Newbury Brighton Southwell Beverley Newmarket Chepstow Stratford Carlisle Nottingham Doncaster Taunton Cartmel Pontefract Exeter Towcester Catterick Bridge Redcar Fakenham Uttoxeter Cheltenham Salisbury Folkestone Windsor Chester Sandown Park Fontwell Wolverhampton Epsom Downs Thirsk Kelso Worcester Goodwood Warwick Leicester Yarmouth Hamilton Park Wetherby Lingfield Haydock Park Wincanton Newcastle Huntingdon York Newton Abbot Kempton Park Perth Source: Dresdner Kleinwort Research estimates The read across to other sports is limited, in our view, particularly given the limited value to football, for example, of a contribution by the bookmakers relative to TV rights income of over £600 per annum. In addition, the future of the levy remains uncertain but with the bookmakers and the government keen to replace it with a commercial agreement, we believe its abolition is now highly likely at some stage. We believe such an agreement would be favourable to the bookmakers. It is also worth highlighting that the horse racing industry materially benefitted from the abnormally high level of high roller gross win generated by Ladbrokes in 2007 and early 2008 – the threat of Ladbrokes and William Hill moving their telephone and online sports betting operations offshore could also be used as additional leverage to reduce the overall payments made to racing. DKIB view: Market overreaction Unfavourable results in H2 2007 Unfavourable football results were experienced across the industry in H2 2007, driven predominantly by English and Scottish Premiership results. In addition, there were 23 race meeting cancellations in July (17% of total meetings) versus zero prior year, no doubt resulting in lost revenues from these meetings. The market continues to disproportionately react to short-term results. In the longer term, the industry has proven that "normalised" margins have remained constant for many years. The market's belief that most punters are price sensitive is another long-standing incorrect assumption. DKIB view: Market overreaction The business of gambling 15 April 2008 10 Online division downgrades in both WMH and LAD for separate reasons Ladbrokes and William Hill have disappointed the market in different ways in their online divisions. William Hill inexcusably failed to invest sufficiently in technology in its sports book which has effectively put it at least two years behind where it should otherwise have been. The software issue directly impacts the sports book only, not the casino and poker subdivisions, and online sports betting represented 33% of online gross win in 2007. Indirectly, the faltering sports book will also naturally have a negative cross-selling impact on its other online products, but forecasts of material declines in online EBIT in 2008 seem overdone. However, this was a huge internal error and the company made a rod for its own back online. Ladbrokes announced that it intended to materially boost its top-line growth in 2008 and as such its online EBIT contribution was expected to be flat YoY in 2008. Whilst we welcome its decision to more aggressively target growth online, given the scalability of the business model, we struggle to see why a combination of top line and continued EBIT growth could not be pursued. In this current uncertain market, this announcement was unsurprisingly negatively received. DKIB: Fair reaction Resignation of David Harding and significant lead time to find a replacement CEO William Hill's inability to quickly find a successor and its eventual appointment of an insider, Ralph Topping, has undoubtedly impacted its share price and partly explains the record discount to Ladbrokes. We actually believe that the appointment of an insider with over 30 years experience makes sense given the complicated nature of the industry from a legal and regulatory perspective, but to convince the market that this was not an option of last resort, the company should have acted much more quickly than it did. Only time and delivery on the stated strategy will help remove the discount, in our view. DKIB: Fair reaction Current trading William Hill and Ladbrokes have suffered sharply contrasting share price performances to Paddy Power in the last 18 months, largely due to Paddy Power's impressive track record of earnings upgrades and downgrades for WMH and LAD (excl. telephone high rollers). But all three face tough comparatives in the first half of the year. We suspect that the current market is unlikely to give them the benefit of the doubt if less favourable H1 sports results impact earnings when these companies report results in August and September and as such a favourable period of results may be of significant importance. We set out the H1 and H2 performances of Ladbrokes, William Hill and Paddy Power in the table below by group EBIT and retail EBIT (UK only for Ladbrokes). The business of gambling 15 April 2008 11 H1:H2 historic split Group H1 H2 Difference % Retail only H1 H2 Difference % William Hill (£m) 2004 129.6 99.3 31 2004 97.1 68.4 42 2005 121.5 120.9 0 2005 88.6 93.0 (5) 2006 160.0 132.2 21 2006 124.1 101.8 22 2007 161.2 123.8 30 2007 124.8 97.5 28 Ladbrokes (£m) 2004 153.3 119.5 28 2004 119.2 95.5 25 2005 134.7 114.3 18 2005 108.8 99.0 10 2006 151.3 110.9 36 2006 111.5 88.3 26 2007 283.4 136.6 108 2007 97.6 90.1 8 Paddy Power (€m) 2004 18.2 12.9 41 2004 12.2 5.5 121 2005 17.8 12.3 44 2005 6.7 2.8 134 2006 19.6 25.8 (24) 2006 6.7 9.3 (28) 2007 40.9 31.2 31 2007 22.0 11.7 88 Source: Company data The table above highlights the volatility of results from year to year and period to period, although H1 EBIT has been on the whole greater than H2. It also highlights the record first-half profits in H1 2007 despite the impact of AMLD duty (ca. £5m extra costs for Ladbrokes and William Hill). Racing statistics So far, results for both football and horse racing have, in our view, been mixed for the bookmakers. Cheltenham, the first major horse racing event of the year, was memorable not only for Wednesday's cancellation and controversies surrounding usage of the whip, but for the minimal number of favourite winners, as shown in the table below: Cheltenham results 2003 2004 2005 2006 2007 2008 2003-08 Favourite winners 10 5 5 7 6 2 35 Irish winners 11 11 13 12 12 14 73 Irish favourite winners 6 4 3 4 3 1 21 Number of races 20 20 24 24 24 25 137 %age of favourite winners 50 25 21 29 25 8 26 %age Irish winners 55 55 54 50 50 56 53 %age Irish favourite winners 30 20 13 17 13 4 15 Average odds of favourite winner 8.1 13.6 11.2 14.6 12.8 13.2 12.3 Source: Racing Post Only two favourite winners out of 25 races represented a favourites win ratio of 8%, materially lower than the previous six-year low of 21% in 2005. Particularly positively for Paddy Power, the number of Irish favourite winners was also significantly below average at just 4% although the number of Irish winners (56%) was similar to the six-year average of 53%. But overall, our horse racing stats results so far suggest mixed fortunes for the bookies in 2008 with a below average number of favourite winners, despite the joint favourite winning the Grand National representing 7% of prize money YTD, but an above average number of 2nd favourite winners as shown in the table below: The business of gambling 15 April 2008 12 DKIB data sample - class one and two races plus races with winners prize money >£15,000 No. of races Winner's prize money (£) No. of fav. winners Fav. win (%) Fav winners prize money (£) Total winners prize money (%) No. of 1st/2nd fav. winners 1st/2nd win (%) Total winners prize money (%) 2007 Jan 50 921,919 23 46.0 375,064 40.7 31 62.0 51.2 Feb 53 1,203,987 24 45.3 523,416 43.5 32 60.4 58.2 Mar 65 2,696,252 14 21.5 661,162 24.5 28 43.1 39.6 Apr 80 2,547,338 26 32.5 727,140 28.5 49 61.3 49.7 May 108 2,859,614 40 37.0 1,128,560 39.5 70 64.8 60.4 Jun 84 4,336,533 17 20.2 1,613,412 37.2 34 40.5 49.3 Jul 71 2,807,129 18 25.4 758,612 27.0 32 45.1 47.1 Aug 92 3,373,902 27 29.3 1,548,353 45.9 44 47.8 57.8 Sep 104 3,315,491 35 33.7 739,361 22.3 56 53.8 47.8 Oct 72 2,466,348 19 26.4 638,630 25.9 37 51.4 57.9 Nov 76 1,888,172 18 23.7 435,310 23.1 43 56.6 59.2 Dec 71 1,959,852 26 36.6 690,611 35.2 40 56.3 54.6 2008 Jan 53 1,027,749 14 26.4 296,480 28.8 28 52.8 48.1 Feb 61 1,347,718 23 37.7 558,717 41.5 35 57.4 56.0 Mar 68 2,880,650 13 19.1 476,850 16.6 33 49.0 55.6 Apr 29 1,561,409 10 34.5 833,903 53.4 17 59.0 74.1 H1 2007 440 14,565,643 144 32.7 5,028,754 34.5 244 55.5 50.6 H2 2007 486 15,810,895 143 29.4 4,810,877 30.4 252 51.9 53.6 H1 2008 YTD 211 6,817,526 60 28.4 2,165,951 31.8 113 53.6 58.8 Source: Racing Post Favourite winners have won races representing 31.8% of prize money YTD, which is below the average of 34.6% in 2006-07. However, 1st and 2nd favourite winners represent 58.8% of prize money, which is above the 2007 average of 52.2% (data not collated for 2006). We believe that results have been satisfactory for the bookies so far this year, but less favourable than the comparative period last year. Summary We remain buyers of Ladbrokes, Paddy Power and William Hill although we do acknowledge that recent negative newsflow and tough H1 comparatives make near-term share price triggers and a re-rating difficult. William Hill remains our top pick, largely driven by its record low P/E rating and discount to Ladbrokes. We believe a 15% discount is appropriate driven by the uncertainty and timing of William Hill's online recovery and Ladbrokes' telephone high rollers and the potential for improvements in its relatively underperforming retail estate (Ladbrokes EBIT per UK shop of ca. £88k versus William Hill's £101k). However, investors should remember that whilst Ladbrokes's profit after tax is ca.15% higher than William Hill's, this is a function of Ladbrokes' lower tax rate (partly due to the fact that Ladbrokes does not pay corporation tax on its online division) and at the clean PBT level, there is virtually no difference. LAD vs WMH – key metrics Ladbrokes (£m) William Hill (£m) Difference (%) PAT - 2008E 171 149 14.7 PBT - 2008E 212 210 0.5 Mkt cap 1,915 1,337 43.3 Debt (31/12/07) 917 1,084 (15.4) EV 2,832 2,421 17.0 Source: Company data, Dresdner Kleinwort Research estimates The business of gambling 15 April 2008 13 On this basis, the EV premium of 17% or £400m is difficult to justify for two such similar businesses and as the chart below suggests, this premium is currently at record levels. Ladbrokes 2008E P/E premium to William Hill -10 -5 0 5 10 15 20 25 30 35 02-Jan-06 08-May-06 11-Sep-06 15-Jan-07 21-May-07 24-Sep-07 28-Jan-08 (%) Source: RIMES, Dresdner Kleinwort Research estimates The business of gambling 15 April 2008 14 Online gamblers The online gambling industry continues to enjoy strong secular growth driven by its still relative nascence, increasing internet/broadband penetration rates, social acceptance/awareness of gambling and regulatory developments. Our universe of online gambling stocks are currently experiencing top-line growth of >20% in 2008 YTD meaning that macro-economic issues will have relatively little impact on the sector. Despite this growth and relative immunity to the cycle, our universe trades on an average 2008E P/E of just 12.7x. We believe that the recent de-rating of online gambling stocks has been materially exaggerated. The 20%-plus growth being experienced by our universe of stocks means that the impact of a consumer slowdown is unlikely to be materially felt by the industry where growth is more dependent on internet/broadband penetration rates, regulation and overall pent-up demand for gambling. Yet despite the sector's effective immunity to the slowdown, strong trading updates, no downgrades to numbers, the subsector has been materially de-rated, which we believe is fundamentally incorrect. The regulatory risk was already priced into these stocks before the credit crunch and macro-economic slowdown – the market is double-counting, in our view. Strong gross win growth continues Recent gross win growth rates have been impressive. In Q4, the average YoY growth rate was 35% with growth ranging between 20-55%. Excluding the impact of acquisitions, 888 and PRTY's organic gross win growth was still over 40%. Last quarter performance by online gambling operators Currency Q4 2007 Q4 2006 Growth (%) 888 US$m 62.8 40.5 55 bwin €m 102.3 81.9 25 PartyGaming US$m 121.4 78.8 54 Sportingbet £m 41.2 34.4 20 Total £m 216.4 160.3 35 Source: Company (SBT Q2 results from Nov-Jan) Gross win growth in 2008 YTD remains strong and we believe that current trading updates suggest growth of at least 20% for all four operators. Current trading updates Company Comment 888 Q1 2008 "has started strongly" at levels above Q4 2007 implying YoY growth of over 25% bwin Gross daily revenues +4.7% QoQ in first 75 days of 2008, implying +20% YoY growth PartyGaming Gross daily revenues of $1.71m in Jan and $1.78m in Feb means that net 2008 revenues are currently >20% up YoY YTD Sportingbet Q3 "has started well" and suggests YoY revenue growth of over 20% Source: Dresdner Kleinwort Research estimates, Company data For the full year, we expect 20% average growth ranging between 11% for bwin and 27% for PartyGaming and 888. Revenue forecasts 2008E 2007 YoY growth % 888 US$m 270 213 27 bwin €m 393 354 11 PartyGaming US$m 579 458 27 Sportingbet £m 148 121 23 Total £m 893 744 20 Source: Company data, Dresdner Kleinwort Research estimates The business of gambling 15 April 2008 15 Growth at value ratings Despite this growth, sector P/Es are at record lows as highlighted in the table below: Growth rates and ratings Q4 2007 gross win growth % 2008E gross win growth % 2008E EPS growth % P/E x 888 55 27 41 16.2 bwin 25 11 151 14.5 PartyGaming 54 27 88 10.5 Sportingbet 20 23 85 8.8 Average (weighted by mkt cap) 35 20 94 12.7 Source: Company data, Dresdner Kleinwort Research estimates The average P/E rating of the sector, weighted by market capitalisation, is therefore 12.7x for 20% gross win growth in 2008 and 94% EPS growth. But whilst we believe our universe of online gambling stocks are materially undervalued on a standalone basis, we believe the market is failing to properly value the following: ► PartyGaming's still existing competitive advantage over its non-US peers in terms of high roller liquidity and scale ► Sector consolidation which we view as highly likely in the next one to two years Poker liquidity testing According to our analysis of pokersitescout data, market share by ring game customer numbers is as follows: On this basis, PartyGaming's PartyPoker appears to have a similar level of liquidity to Ongame (Bwin) and iPoker Network (PlayTech) and we believe the market is valuing PartyGaming as such. This, however, is fundamentally incorrect, in our view. As we have previously reported, this high level pokersitescout data is a reflection of total player numbers and not value. In fact, our analysis below suggests that a US$25/50 NL Texas Hold'em ring game player is worth 227x the revenue of a US$0.02/0.04 player, so grouping all players into one pot and comparing sites based on total customer numbers is arguably meaningless. Customer numbers data, therefore, needs to be treated with caution which is why we use customer number data more as a tool for trend analysis for individual companies rather than comparing the performance of companies within the dataset and assessing market shares. In the section, we perform more detailed analysis into: ► Ring games ► Sit & Go tournaments Ring game market share by customer numbers 29.8 13.1 10.0 8.9 8.6 6.4 3.0 2.8 2.6 2.2 2.1 2.1 1.9 1.9 1.2 1.2 1.1 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 PokerStars Full Tilt PartyPoker Ongame iPoker Network Everest Poker IPN (Boss Media) Svenska Spel Ultimatebet Absolute Poker Bodog Cake Poker Network MicroGaming Pacific Poker Ladbrokes B2B Poker Cryptologic (%) Source: Pokersitescout 16 The business of gambling 15 April 2008 16 Sit & Go tournament liquidity testing – waiting time for tournaments PokerStars PartyPoker iPoker Ongame Pacific Poker Ladbrokes Number of players 6 9 6 10 6 10 6 10 6 10 6 10 2200-2300 hrs GMT $11-13 Turbo 72 secs 2 mins 2 mins Speed 43 secs 56 secs 2 mins 3 mins 1 mins 3 mins Normal 56 secs 33 secs 3 mins 2 mins 3 mins 3 mins 1 mins 4 mins 6 mins 3 mins $50-60 Turbo 54 secs 8 mins 8 mins 14 mins Speed 3 mins 6 mins 6 mins 20 mins Normal 4 mins 10 mins 12 mins 4 mins 7 mins 6 mins 19 mins 35 mins $100-114 Turbo 2 mins 2 mins Speed 4 mins 11 mins 8 mins Normal 14 mins 70 mins 19 mins 70 mins 12 mins 58 mins 0500-0600 hrs GMT $11-13 Turbo 4 mins 9 mins 12 mins Speed 4 mins 4 mins 8 mins 10 mins Normal 2 mins 62 secs 15 mins 9 mins 15 mins 35 mins 10 mins 29 mins $50-60 Turbo Speed 2 mins 7 mins 33 mins 20 mins Normal 5 mins 58 mins 70 mins 29 mins 29 mins 70 mins $100-114 Turbo Speed 6 mins 8 mins 13 mins Normal 18 mins 58 mins Source: Dresdner Kleinwort Research estimates The business of gambling 15 April 2008 17 Sit & Go tournaments We performed a random test of the number of poker players at two different times during the day. 2200-2300hrs GMT represented a peak period of playing in Europe whilst 0500- 0600 represents a peak playing period in the US. Our detailed results by buy-in, number of players and speed of tournament can be found on the facing page. A summary of the optimal weighting time by buy-in and number of players is set out in the table below (blank entry means no such tables were running at that time): Summary of Sit & Go liquidity testing US$10 US$10 US$50 US$50 US$100 US$100 Number of players 6 10 6 10 6 10 2200-2300 hrs GMT PokerStars 43 secs 33 secs 54 secs 2 mins 2 mins PartyPoker 72 secs 56 secs 8 mins 3 mins 4 mins iPoker 2 mins 3 mins 4 mins 7 mins 11 mins 70 mins Ongame 1 mins 6 mins 8 mins Pacific Poker 4 mins 6 mins 19 mins 35 mins 58 mins Ladbrokes 3 mins 20 mins 0500-0600 hrs GMT PokerStars 2 mins 62 secs 2 mins 6 mins 8 mins PartyPoker 4 mins 4 mins 58 mins 7 mins 13 mins iPoker 8 mins 35 mins 29 mins 58 mins Ongame 10 mins 20 mins Pacific Poker 29 mins 29 mins 70 mins Ladbrokes Source: Dresdner Kleinwort Research estimates We make the following observations: ► PokerStars unsurprisingly demonstrated the strongest liquidity in all game formats at both times during the day. ► All operators offered decent liquidity at the US$10 buy-in at 2200-2300hrs. At 0500-0600 only PokerStars, PartyPoker, iPoker and Ongame had attractive liquidity at the US$10 buy-in. ► PartyPoker offered significantly greater liquidity at the US$100 buy-in than its other non- US peers with only a four minute wait at 2200-2300hrs and it was the only site running any games at this buy-in at 0500-0600hrs. ► iPoker and Ongame offered decent liquidity at the US$50 buy-in at 2200-2300hrs but not at 0500-0600hrs. PartyPoker had some liquidity at the 10-player US$50 buy-in at 0500-0600hrs. ► Ladbrokes had zero liquidity at 0500-0600 hrs across all buy-ins and only really offered any liquidity at the US$10 buy-in at 2200-2300 hrs. ► Pacific Poker demonstrated liquidity only at the US$10 buy-in and was weak at US$50 and US$100 buy-ins at both times during the day. Conclusion Liquidity depends on which type of game, which level of buy-in and at what time of day a customer is playing. Unsurprisingly, PokerStars has the greatest level of liquidity amongst the sites tested above. Perhaps surprisingly for those who observe pokersitescout peak players only, PartyPoker's liquidity at higher buy-in levels is significantly greater than its non-US facing peers, which is being overlooked by the market, in our view. Given that a US$100 buy-in customer pays ten times the fee to a US$10 buy-in customer but the game takes just the same time to play, this is an important competitive advantage for PartyPoker. The business of gambling 15 April 2008 18 Ring games We have performed an analysis of ring games at various different blind structures. The type of game chosen was NL Texas Hold'em, the most popular game on all major sites. We set out our analysis in the table below: PartyPoker rake analysis, No Limit Texas Hold'em Limit Average pot size Average rake per pot No. of hands per hour Rake per hour No. of tables Rake %age of total rake %age of total players $25/$50 665.9 1.9 102.0 191 6 1,145 3.6 0.5 $10/$20 353.7 1.6 106.5 158 10 1,579 5.0 0.8 $5/$10 240.2 1.5 78.0 116 29 3,350 10.6 3.3 $3/$6 254.4 1.3 84.0 112 23 2,584 8.2 2.0 $2/$4 75.7 1.2 75.0 90 56 5,057 16.0 5.1 $1/$2 42.4 1.2 69.0 79 98 7,704 24.4 9.2 $0.50/$1 17.9 0.4 84.0 35 136 4,770 15.1 12.7 $0.25/$0.50 9.1 0.3 72.0 18 149 2,678 8.5 14.3 $0.10/$0.25 4.9 0.2 72.0 10 214 2,202 7.0 19.6 $0.05/$0.10 1.3 0.0 87.0 3 145 409 1.3 19.0 $0.02/$0.04 0.6 0.0 63.0 1 126 106 0.3 13.6 Average 31.8 992 31,582 100.0 100.0 Source: Dresdner Kleinwort Research estimates, pokersitescout The obvious conclusion is that the revenue generated from different levels of the game are materially different, so much so that the average rake generated from a US$25/50 ring game was over 200x greater than that from a $0.02/0.04 player. Put simply, PartyPoker needs 227 US$0.02/0.04 ring game players to generate the same revenue as ONE US$25/50 ring game player. We can also make the following observations: ► Players playing US$2/4 blinds and above represented only 11.6% of the total number of players but 43.4% of the rake generated. ► Players playing US$0.05/0.10 blinds and below represented 32.6% of the total number of players but only 1.6% of the rake generated. ► Players playing US$0.10/0.25 to US$0.50/1 blinds represented 46.6% of the total number of players and 30.6% of the rake generated ► Higher limit players, who are "tighter" or less "loose" than lower limit players, not only pay a greater absolute rake per hand but also play significantly more hands per hour The use of pokersitescout to compare and contrast total customer numbers is therefore of limited use. Rather than comparing the data with other sites, where customer numbers can easily be manipulated by focusing on micro-limit tables, data trends for individual sites is of much more use, assuming adjustments are made if an individual sites attempts to attract more or less micro-limit players. The business of gambling 15 April 2008 19 Following on from this, we analysed the number of players playing on the six different sites at different times during the day which we set out below: Number of active players on NL Texas Hold'em ring game PokerStars PartyPoker iPoker Ongame Pacific Poker Ladbrokes Total 2200-2300 GMT 26 March 2008
Partygaming share price data is direct from the London Stock Exchange
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