SOURCE: business.guardian.co.uk

PartyGaming slipped into the red in the first half of 2007 as a result of the U.S. government's shock decision last year to ban all online gambling.

The full impact of PartyGaming's withdrawal from the U.S. - the world's most lucrative gaming market - was revealed today as the group posted a pre-tax loss of $47m (£23.4m) for the first six months of this year. Revenues plunged by nearly 70 percent to $212.5m.

The firm said it would be "imprudent" to pay a half-year dividend.

The company, which runs thePartyPoker and PartyCasino websites, is trying to establish whether it could face prosecution for taking bets in the U.S. before the ban kicked in last October.

Mitch Garber, its chief executive, said talks initiated by PartyGaming with the U.S. Department of Justice were continuing. "We are working toward a satisfactory resolution," he said.

Shares in PartyGaming rebounded by nearly 10 percent to 25p this morning, reversing a sharp fall yesterday, as Mr Garber insisted the company's prospects were good despite continuing legal uncertainties in a number of countries.

The group crashed out of the FTSE 100 index after the U.S. ban wiped out three-quarters of its business. It floated at 116p a share in June 2005 and peaked at 170.75p that summer.

Current trading figures met City expectations, with revenues averaging $1.4m a day in July and August. The firm signed up an average of 1,192 new poker players a day.

PartyGaming is keen to expand through acquisitions and joint ventures in China and Russia, and hinted that it was close to clinching several deals.

"Over the coming weeks and months we expect to announce a number of further important business alliances with leading companies around the world that will help us to promote and grow our business," Mr Garber said.

The group has worked hard to reduce its dependence on poker, which now accounts for two-thirds of revenues, down from 86 percent. Revenues from casino games were up, and it has set up a new sports betting division.