Trading Statement

Empire Online Limited
18 July 2006

                         Empire Online Limited ('EOL')

                             Q2 2006 Trading Update

Empire Online Limited (the 'Company' or 'EOL'), a leading online gaming network
and provider of marketing services to the online gaming industry, today provides
the following trading update for the second quarter of 2006.

Seasonality

The second quarter is traditionally the slowest quarter of the year for the
online gaming industry. The rate of new player signups has always been lowest in
the second quarter, rebuilding and growing throughout the second half of the
year. This year the normal seasonality has been more pronounced.

Empire now recruits the majority of its new players from outside of the USA.
EOL's sign-up's have therefore been more exposed to the short term change in
online gaming trading patterns caused by the World Cup. This has had an
additional dampening effect on new player sign ups and player activity in poker
and casino gaming, resulting in June being the slowest month in Q2.

Trading highlights for Q2  :

  • Geographic diversification with over 60% of new real money players driven
    from outside of the USA (Q1 2006 over 50% of new real money players driven
    from outside of the USA).

  • Net cash position of over $260m available for investment.

  • Number of new real money players across all gaming platforms has risen by
    29,928 for Q2 2006 (Q1 2006: 44,217; Q2 2005: 42,772). Excluding Empire
    poker the comparatives are Q1 2006: 36,242; Q2 2005: 9,838. Non-US players
    accounted for over 60% of all new real money signups in Q2 2006.

  • Total Company net gaming revenue for Q2 2006 was $18.3m (Q1 2006: $21.1m;
    Q2 2005: $25.3m). Net gaming revenues across all gaming platforms excluding
    Empire Poker for Q1 2006 were $17.6m and for Q2 2005 $5.1m.

  • Total Company Casino revenue of $16m (Q1 2006: $15.3m; Q2 2005: $5.1m).

  • Total Company Poker revenue of $2.2m (Q1 2006: $5.8m; Q2 2005: $20.2m).

  • Estimated earnings before interest taxation depreciation and amortisation
    (EBITDA) and non-recurring exceptional items of approximately $7.2m (Q1
    2006:  $8.5m; Q2 2005: $12.4m)

  • Cost per acquisition (CPA) of new real money players of $329 (Q1 2006 :
    $222). As the majority of Empire Online players are recruited through
    revenue share deals with affiliates, the company includes the ongoing costs
    for players recruited in previous periods within its CPA definition. The
    calculation of CPA does not flex with short term changes in new real money
    sign-ups and therefore does not affect earnings directly. Restating the CPA
    to exclude revenue share players would give a cost in Q2 of $116 (Q1 2006 :
    $109).

Key Performance Indicators (KPI's) excluding Empire poker

                                  Q2 '06               Q1 '06             Change           Q2 '05               Change
                                                                            %                                     %
(1) Number of New Real

Money Players acquired

Poker                            10,681               13,313               (22%)                   0              100%
Casino                           19,297               22,929               (16%)               9,838               96%
Total                            29,928               36,242               (18%)               9,838              204%

(2) Number of Active
Players (a)

Poker                            28,949               33,550               (14%)                   0              100%
Casino                           51,035               51,801                (1%)              23,613              114%
Total                            79,984               85,351                (6%)              23,813              236%

(3) Average Active
Players per Day

Poker                             3,785                4,102                (8%)                   0              100%
Casino                            3,566                3,868                (8%)               1,324              169%
Total                             7,351                7,970                (8%)               1,324              455%

(4) Poker Active

Player days
Poker                             0.34m                0.37m                (6%)                   0              100%


(a) Number of Active Players is defined as those who have played for real money
in the preceding 90 days.

Outlook

Empire Online is financially strong with considerable cash resources of over
$260m. The Company is well placed to exploit value-enhancing opportunities as
they arise. Although, the Company has progressed several opportunities,
completion of transactions has been hindered by unreasonably high valuations
expected by vendors and the uncertainty surrounding the US regulatory
environment. In addition to its acquisition strategy the Company is also seeking
to diversify its existing business operations. The Company has recruited
additional resource to allow senior management sufficient time to adequately
explore all possibilities in this area.

As part of this ongoing process, the Company has altered the incentives
structure provided to one of its main affiliate partners. This change is not
expected to affect earnings for 2006 but may have impact on earnings for 2007.

Commenting on today's trading update, Noam Lanir, CEO, said 'I am pleased to
report further progress, against the normal Q2 headwind, in re-building the
Company. The Company's geographic diversification and financial strength are key
features which will ensure future success. I expect this progress to continue
through the second half of 2006.'

For further information:

Empire Online Limited                                         [phone]
Noam Lanir, Chief Executive Officer
Andrew Burns, Chief Financial Officer
Andrew Burnett, Head of Mergers and Acquisitions




END




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