Sept. 6 (Bloomberg) -- PartyGaming Plc, the online poker operator that sold $1.9 billion of stock in a June initial share offering, said first-half profit rose 25 percent amid an Internet gambling boom. Growth rates are slowing, the company said.

Net income increased to $171 million, or 4.5 cents a share, from $136.5 million, or 3.6 cents, a year earlier, the Gibraltar- based company said today in a statement. The company incurred costs of $62.3 million related to the stock sale.

PartyGaming controls about 54 percent of the online poker market, which according to Christensen Capital Advisors has grown from $90 million in 2002 to $1 billion in 2004. Analysts say growth in the industry will outweigh any potential regulatory concerns. The company makes 87 percent of its revenue in the U.S., where the Justice Department considers online gambling illegal.

``Against a background of moderating market growth, group revenues are expected to continue to show good year-on-year growth, although at rates lower than the substantial rates previously experienced,'' the company said in the statement.

Earnings before interest, tax, depreciation and goodwill amortization increased 70 percent to $257.7 million in the first half, PartyGaming said. Analysts had forecast profit of about $250 million on that basis.

Revenue, 92 percent of which comes from fees for poker games played on the company's Web site, rose 81 percent to $437.4 million, PartyGaming said. Sales in the U.S. gained 77 percent, while growth outside the U.S. more than doubled.

PartyPoker.com

PartyGaming is seeking to expand in international markets including the U.K., Scandinavia, Germany and Australia. It may make a competing offer for Empire Online Ltd., the Sunday Telegraph reported Sept. 4, without saying where it got the information. Empire Online said yesterday that it was in talks with Sportingbet Plc about a possible takeover.

PartyGaming was formed in 1997 and sold shares worth 1.04 billion pounds on the London Stock Exchange in June. The stock has gained 35 percent since it was offered at 116 pence a share, giving the company a market value of 6.27 billion pounds. That makes PartyGaming the U.K.'s 43rd-largest company by market value, ahead of companies such as British Airways Plc and Kingfisher Plc.

The number of players regularly using the company's PartyPoker.com site reached 415,633 in June, an 89 percent increase on the previous year, the company said. The site has gained active players every quarter since it opened in 2001.

PartyGaming doesn't plan to pay a first-half dividend. The company has said it will pay a dividend of $200 million for the year ending Dec. 31, which would have been two-thirds of the total payment had the company been listed the whole year.

To contact the reporter on this story: Paul Jarvis in London at pjarvis@bloomberg.net.

Last Updated: September 6, 2005 02:57 EDT