INTERNET gambling stocks, which have been savaged since PartyGaming gave warning of slowing growth, staged a minor rally yesterday on the back of strong figures from Sportingbet, one of its biggest rivals.

Nigel Payne, Sportingbet’s chief executive, said that in the past ten weeks its Paradise Poker website had enjoyed its fastest growth since its acquisition last November. “I don’t call that a slowdown,” he said.

Mr Payne said that all the internet poker operators he had spoken to were seeing strong growth in the commission they charge players, known as the “rake”, and that PartyGaming’s situation was partly a symptom of its huge size. “I think what you’re seeing is more a case of the law of large numbers,” Mr Payne said. “For us to maintain growth of 100 per cent, we need a daily rake of $300,000 (£172,000). For PartyGaming to maintain 100 per cent growth the figure is probably $3 million.

“In absolute terms I don’t believe that PartyGaming are growing more slowly. But when you get to a certain size you’re always going to struggle to maintain the momentum at quite the same level.”

Mr Payne refused to criticise Richard Segal, PartyGaming’s chief executive, for missing its growth targets so soon after flotation, damaging the entire sector. “With the benefit of hindsight, Richard probably wishes he had set somewhat lower targets. But I think PartyGaming remains a phenomenal business and the reaction has been grossly overblown.”

Mr Payne’s comments were echoed last night by Patrik Selin, the head of Ongame, the Swedish owner of PokerRoom.com. He predicted that, having tripled its turnover last year, PokerRoom would double it this year.

Mr Selin, who is planning a flotation next year, said: “People’s expectations were too high, and to some extent that is the industry’s fault. But there are few industries with these growth prospects. They’re not going to grow as much as the last few years, but it’ll be solid growth.”

Sportingbet reported a jump in pre-tax profits from £8.3 million to £40.8 million in the year to July 31, from turnover up 30 per cent to £1.53 billion. Diluted earnings per share rose from 6.5p to 13.9p and there is a maiden dividend of 1p a share.

Sportingbet’s shares added 27p to 314p, while PartyGaming was up 7p at 78½p. Empire Online jumped 9p to 111p.

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