BPTY.L Regulatory News (BPTY)

10 July 2012

bwin.party digital entertainment plc

('bwin.party' or the 'Company' and, together with its subsidiaries, the 'Group')

Pre-close Trading update

Highlights

·; Top three market position secured in Spain following launch of .es sites

·; First social gaming products launched

·; Integration of .com platforms on-track to complete during H2 2012

·; Buy-back completed; €100m returned to shareholders in last year1

·; Several parties interested in acquiring Ongame

·; Trading in the second quarter was broadly in line with expectations; solid performances in casino and bingo offset by continued pressures in poker and a lower than expected gross win margin in sports betting

·; Clean EBITDA margins in the first half likely to be slightly ahead of expectations

Trading

The Group's trading performance since the beginning of April 2012 was broadly in line with expectations with solid performances in casino and bingo offset by continued pressures in poker and a lower than expected gross win margin in sports betting. While certain southern European markets remain challenging, the launch of the Group's sports, poker, casino2 and bingo products in Spain went live on 5 June 2012 and the early performance has been encouraging with a top three market position secured, consistent with our regulated market strategy.

In sports betting, although the Euro 2012 Championship delivered a meaningful uplift in betting activity and customer numbers, gross win margins were lower than expected due to the majority of results following the predicted path. Casino performed in-line with the normal seasonal trends. In poker, as for many other operators, the competitive challenges experienced in April continued in May and June, exacerbated by the Euro 2012 Championship and the launch of Zoom Poker on PokerStars that went live at the beginning of the second quarter. Bingo performed better than expected and our new Binguez brand launched into the Spanish market.

The opening of the Spanish market was later than scheduled and accordingly we anticipate that Clean EBITDA margins in the first half will be slightly ahead of the Board's expectations due to the delay in marketing spend around the launch.

Outlook

As previously announced, we expect that additional gaming taxes in Germany and the investment in our social gaming initiative will impact the Group's performance in the second half. While we expect a recovery in sports gross win margin and an improvement in poker, following the integration of our liquidity pools during the second half and the launch of our own version of fast poker, the new federal tax on sports betting in Germany is expected to result in an additional impact to the Group's full year Clean EBITDA of approximately €5-10m in the current year.

Regulatory update

In Germany the state parliaments have now ratified a modified version of The State Lottery Treaty. We believe that the new Treaty once again fails to meet the tests already set by the jurisprudence from the Court of Justice of the EuropeanUnion ('CJEU'). We are waiting to see the details of the licensing process for the new Treaty that is now expected to be in place during the autumn of 2012.

In addition, Germany's federal government has introduced the Rennwettlotteriegesetz ('RWLG'), a federal tax on sports betting at a rate of 5% on turnover that applies to all forms of sports betting in Germany, including online, from 1 July 2012. As a result, the Group will now pay this tax on all of our German sports betting turnover.

In Italy the government has announced that online slot machines are to be allowed from December 2012 which should provide a further stimulus for our casino business in 2013.

In the United States, Nevada is expected to issue its first licences for online poker shortly and Delaware has recently passed intra-state online gambling legislation. Initiatives in several other states, including New Jersey, are at various stages in the political process. We remain encouraged by these developments and continue to believe that federal online gaming regulation remains the preferred solution, a view supported by leading land-based gaming operators in the US as well as a number of members of the US Congress.

Integration update

We continue to make good progress and remain on-track to merge our .com poker platforms during the second half of 2012 which will help us to deliver the full €65m of annualised synergies in 2013 as previously announced.

Product development

During June, we launched our new sports betting portal for mobile that has a much improved interface with graphics that have been tailored for smartphone technology; in social gaming, we beta-launched our first social gaming products called Poker Friends and Spinning Heads; and we launched a new Mac download client for PartyPoker.com.

Ongame

Following the withdrawal of ShuffleMaster from the purchase of Ongame, six potential purchasers have expressed an interest in acquiring Ongame. Further updates will be provided in due course.

Distribution policy

Since announcing the Group's distribution policy on 30 June 2011, the Group has returned approximately €100m to shareholders through a combination of dividends and share repurchases. The repurchase and cancellation of 41.8m shares or 4.9% of the Group's issued share capital was completed on 30 June 2012 at a cost of €70m.

Renewal of the authority to buy back up to 10% of the issued share capital was approved by shareholders at the Annual General Meeting on 7 June 2012.

Half year results

The Group's results for the six months to 30 June 2012 will be announced on Friday 31 August 2012.

Contacts:

bwin.party digital entertainment plc InvestorsPeter Reynolds +44 (0) 20 7337 0100MediaJohn Shepherd +44 (0) 20 7337 0100