Barrons: Only the house wins

[Sniper]

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In short, I think Party’s days as the market leader are over next Friday.

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Before accounting for the movement of Party's US players... Party's non US revenue is larger than any of it's competitors, including the competitors US players. Remember that prior to next friday, Party had close to 50% market share (by revenue).

[Leader]

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In short, I think Party’s days as the market leader are over next Friday.

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Before accounting for the movement of Party's US players... Party's non US revenue is larger than any of it's competitors, including the competitors US players. Remember that prior to next friday, Party had close to 50% market share (by revenue).

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Well I guess I meant effectively over. It might take 2-6 weeks, but it's inevitable IMO.

Just to clarify, I don't think that party is going bankrupt or going to start stealing people's funds.

[Sponger.]

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Just to clarify, I don't think that party is going bankrupt or going to start stealing people's funds.

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"What do you mean the poker site is out of money?"
"Insolvent?!"
"You only have enough cash for the next three customers?"


Seriously though I'd kinda be freaked out about this news and if I were a US customer I'd be completely cashed out before the frenzy starts.

[Leader]

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Just to clarify, I don't think that party is going bankrupt or going to start stealing people's funds.

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"What do you mean the poker site is out of money?"
"Insolvent?!"
"You only have enough cash for the next three customers?"


Seriously though I'd kinda be freaked out about this news and if I were a US customer I'd be completely cashed out before the frenzy starts.

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Well I'd be completely cashed out too, but then again I don't play at party to begin with because the room is run by fools.

[gonebroke]

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Well I'd be completely cashed out too, but then again I don't play at party to begin with because the room is run by fools.

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If the #1 online gambling company is run by fools, what do you have to say about the management of the other sites? The ones who say they are "exempt" from the new law. Good luck cashing out your funds if they ever get raided. I would trust my money with PartyGaming over any other site at this moment in time.

[Synergistic Explosions]

In my opinion it appears this and other poker forums have been deluged by short selling scumbags of the gaming stocks, trying to instill fear and cause panic.

I've seen several here and elsewhere. You guys are real low lifes.

[Leader]

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Well I'd be completely cashed out too, but then again I don't play at party to begin with because the room is run by fools.

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If the #1 online gambling company is run by fools, what do you have to say about the management of the other sites?

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That they don't have the playing base that party has. Party has made consistently bad decisions on a variety of fronts over the past year. The fact that they are big is what enables them to overcome those decisions. The most attractive way PP has to market itself is that it's the largest room. That's what attracts the fish and the pros. That will soon be gone, and then we will see how they do.

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The ones who say they are "exempt" from the new law. Good luck cashing out your funds if they ever get raided.

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Raided by whom? That statement makes little sense. None of these companies are on US soil. Therefore, US law enforcement will not be raiding any of them. If the US government what’s these sites shut down, they would have to go through the foreign governments. That's been tried in the past. The US has been unsuccessful and I see no reason they would be in the future. Alternatively, they could try to get their hands on the officers of those companies. I don't think any of these officers is going to be going to the US anytime soon. Therefore, the US would have to initiate an extradition hearing. This will also fail because in the terms of every extradition treaty the US signs there is a clause that states to the effect of: If a crime is not a crime in both countries, there is no agreement to extradite the individual. Therefore, my funds are in fact perfectly safe. Thank you for your concern.

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I would trust my money with PartyGaming over any other site at this moment in time.

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I'm not saying your money is not safe. Though I don't know why you'd want to keep your money in a site that has turned its back on you as a player.

[StellarWind]

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The article is implying that Party could choose to default on its players and still be worth something as a company.

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I think you completely misunderstood what Barron's is saying.

This is the quote in your original post:

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Of course, the company could make good on its obligation with its retained earnings and shareholders equity

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And this is what the article actually said (emphasis mine):

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Of course, the company could make good on its obligation with its retained earnings and shareholders equity, if there were any.

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Slight difference [img]/images/graemlins/blush.gif[/img]. The writer then lays out the case that many of Party's balance-sheet assets are worth much less than their stated value because the business is largely in ruins due to recent developments.

[StellarWind]

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Party is not going anywhere... and may continue to be the market leader even after restricting US players from access to real money tables...

Look for Party to try and buyout some of its competition... its not going bankrupt!

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You may be right about this. But it disturbs me that you keep saying it over-and-over without providing any convincing evidence.

By withdrawing from the U.S. market Party is about to lose about 80% of their revenue. That is a devastating blow for virtually any business in any industry, much less a young business in an extremely unstable industry. I don't understand how you can blithely dismiss all doubts without having done a very careful analysis.

Back at reality, the problems for Party go far beyond the loss of the U.S. market:

1. By focusing on the non-U.S. market they are going after the worst market segment. American customers produce much higher revenues per player. Focusing on lower-revenue customers means lower profit margins.

2. Everyone badly wants non-U.S. players including the sites that are not pulling out. Competition for non-U.S. customers is going to be vicious.

3. Game selection is perhaps Party's single biggest selling point. This advantage is going to disappear or even become negative as Party shrinks drastically and several competitors grow.

4. Party's affiliate network is going to be tremendously damaged as online affiliates either drop them entirely or showcase rooms that they can sell to everyone. No online affiliate wants to lose a sale because they hyped Party to a customer who turns out to be American. Much better to gush that "UB software is awesome" or "Absolute has great bonuses". If that happens to steer Canadians and Europeans away from Party, oh well, not the affiliate's problem.

5. Technology is very important in this business. An 80% drop in revenues is going to be felt big time in engineering. Meanwhile the competition is able to spend more than they used to. Another way Party is likely to become less competitive.

6. The highly publicized (in Europe) stock market debacle is going to undermine public trust in Party's solvency.

7. New capital will be hard to get. The stock and bond markets are effectively closed until further notice.

The trouble has just begun. I agree with the "falling knife" theory. Most people still don't get that the problems are just beginning. Party stock is likely to go much lower before the company adjusts to its new circumstances.

[myself]

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The problem all this poses for gamblers is that, unlike the brokerage industry, customer accounts aren't segregated and insured. Your money and the house's money tend to be one.



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I am curious about this.

Stars segregates the players' accounts. What about Party??