Friday, July 01, 2005

Investors turn online Poker firm into retail giant

Retail investors showed a willingness to gamble on the fortunes of PartyGaming yesterday as the value of the online poker firm hit £5.7 billion.

On the first day of full trading, PartyGaming shares rose more than 2% or 3.5p to 142.5p - well above the price of 116p at the time of its initial public offering on Monday.

It means PartyGaming is now on a par with retail giants such as Marks & Spencer and B&Q owner Kingfisher in terms of market value.

When conditional dealings began in its shares earlier this week, the company was already worth more than well-known firms such as British Airways, Dixons and Boots.

The rise in the share price suggests investors have overcome concerns over the legality of online poker in the United States where PartyGaming generates 90% of its revenues. Some analysts fear the introduction of legislation in the US that will prohibit online gambling.

Other threats to the company come from intensifying competition which could weaken margins or the potential for online poker to be a short-term fad.

But the Gibraltar-based company has countered this by pointing out that case law in the US indicates only sports betting is prohibited and not online poker. PartyGaming owns the PartyPoker brand and its online poker gaming room has attracted more than one million users since it was set up in 2001. Customers pay a type of commission known as rake to play against each other on individual tables of up to 10 players or in tournaments.

Online poker generated about 553 million US dollars (£305m) or 92% of PartyGaming’s revenue in 2004, helping it to notch up annual pre-tax profits of 371.7 US dollars (£204.6m) against 89.2 million dollars (£49.1m) last time.

The group, formerly known as iGlobalMedia, also has gaming brands including Starluck Casino and PartyBingo. It has more than 1,000 staff, including 126 people at its head office in Gibraltar, 57 marketing staff in the UK and 925 customer support and software development workers in India.

Related Links and Articles:

Online Poker Rooms - Listings in My Gibraltar Directory

Gibraltar Government new Gambling Legislation Consultation Paper PDF Format (Not draft Bill)

21June 2005 - Gibraltar and USA clash over gambling

20 June 2005 - Gibraltar Government to push new Gambling Laws by Autumn

15 June 2005 - PartyGaming shows hand on flotation value

12 June 2005 - Legal ambush could slash Party Gaming's £5bn jackpot

13 May 2005 - PartyGaming puts £5bn on its flotation value

18 March 2005 - Online casino 888.com plans float

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