PartyGaming, the world's biggest online gamer brought low by the US ban on internet gambling, said it would begin the hunt for a new chief executive after Mitch Garber revealed plans to take his family back to North America next year.

PartyGaming shares dropped more than 5 per cent to 26p.

Mr Garber holds 8.75 million shares in PartyGaming, worth £2.275 million at that prevailing price.

The operator of the PartyPoker website said it had hired headhunters to review both internal and external candidates for Mr Garber's job after the Canadian-born executive told the board of his intention to leave.

Mr Garber joined the Gibralter-based gaming group almost exactly two years ago ahead of a massive crackdown by the American authorities that forced PartyGaming and its UK peers to shut down their US-facing gambling businesses.

His predecessor had left because he was reluctant to relocate to Gibralter for family reasons.

Mr Garber's employment contract will expire next May. He will stay on until a successor is found and remain with PartyGaming for an agreed handover period.

Mr Garber said there was "never a good time to announce that you intend to leave a company", but he said he was leaving PartyGaming in good shape.

His departure plans came as PartyGaming posted better than expected pre-tax profits from continuing operations of $111.7 million, up from $50.9 million the previous year and just above a range of analyst forecasts that peaked at $110 million.

Total net revenues were $476 million, less than half the $1.1 billion reported the previous year and underscored the depth of internet gamers suffering in the wake of the US gaming ban.

Speaking on a conference call, PartyGaming executives told reporters this morning that profit margins should increase to about 30 per cent this year as it cuts back on the percentage of its revenues spent on marketing.

Mr Garber also said talks with US regulator aimed at preventing prosecutions for companies that took bets before the ban was imposed in 2006 were going well.

Talks have been ongoing for about a year. Online rivals 888 and Sportingbet have also been in dialogue with regulators.

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