PartyGaming, the world's largest online poker operator that has been tipped to pursue acquisitions, has unveiled a 70 per cent increase in half-year earnings, but cautioned on the pace of future growth.

As it delivered its first set of results since listing on the London market earlier this year, PartyGaming said pre-tax profits for the six months to the end of June came in at $257.7 million (about £140m) - before flotation related expenses of $22.6 million.

The City responded by wiping nearly £2 billion off the group's market value during the morning. By midday the shares had lost 50p to 106.75p - a fall of nearly 32 per cent.

PartyGaming, and its bankers at Dresdner Kleinwort Wasserstein, floated its shares on the London Stock Exchange in June in what was the biggest IPO on the market for the past five years.

After being dealt an initial valuation of just over £4.6 billion, the group's shares have since soared and closed last night at 160.25p, giving PartyGaming a stock market worth of more than £6.25 billion.

The group, which operates the PartyPoker website, this morning said that during the first half of the year it had raised operating cashflow by 67 per cent to $270.9 million and said it continued to enjoy "strong positions" in its core online gambling markets.

But, although it signalled its ambitions to grow this morning, PartyGaming made no mention of its potential takeover intentions towards Empire Online, the newly listed gaming group - and partner of PartyGaming - that is subject to a £790 million offer from rival company Sportingbet.

If it were to trump Sportingbet's offer, this would be the biggest acquisition in the history of online gambling.

Richard Segal, the chief executive, also warned that the pace of growth is "moderating" and said the gaming group would concentrate more efforts on retaining existing customers.

He said: "As expected, while the online gaming market and poker in particular continues to show strong year on year growth, the rate of growth is continuing to moderate. As it does so, the group will continue to adapt its marketing strategy and infrastructure to provide greater focus on customer retention and player value."

PartyGaming said it was failing to hold on to existing customers at a faster rate than expected and noted the growth in the "casual" online player. In part as a result, PartyGaming made clear that its dazzling rate of recent growth is unlikely to continue in the future.

However, the group nevertheless maintained that it was "comfortable" with City analysts' predictions about future profits.

No interim dividend is to be paid, although PartyGaming said it expected to pay a full-year dividend - worth a total of about $200 million - next May.

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