Monday, July 18, 2005

‘We are totally committed to Gibraltar' - PartyGaming Chief

by Dominique Searle

With a further 50 vacancies being advertised this week, the first Gibraltar company to float on the London Stock Exchange has declared its commitment to Gibraltar in no uncertain terms.

“We are absolutely committed to Gibraltar. There is absolutely no question mark over that whatsoever,” Richard Segal, the PartyGaming’s Chief Executive Officer tells the Chronicle in an interview today.

Shares in online casino group PartyGaming surged earlier this month after it completed the biggest London flotation in five years, taking its market value to about £5 billion.

The over-subscribed offer valued PartyGaming higher than many household names such as British Airways and chemicals group ICI and it now has a market value guaranteeing a place in the FTSE-100 index of blue-chip UK companies this September.

And ‘You ain’t seen nothing yet’ says Mr Segal who oversees the development of one of the most extraordinary business success stories of all time. But please note – Gibraltar residents aren’t allowed to gamble on line with locally based online gaming companies.

“We have got a pool of employees and have scaled up with the demands placed on ourselves and with business growth,” says Mr Segal adding that “we want to be the largest gaming company in the world”.

Mr Segal relates how the extraordinary story started in 1997 and when it was founded by the inspiration and vision of Ruth Parasol as an on line gaming company, principally an online Casino site.

“Ruth Parasol then met up with Anurag Dikshit who is a graduate from the Indian Institute of Technology.

She was originally licensing the software for the Casino site but he wrote the software for a Casino site, saving on a substantial license payment, and then they developed the poker site PartyPoker.com."

Major beneficiaries include Mr Dikshit, the group’s 34-year-old founder and operations director, who reduced his stake from around 40 percent to 32 percent, as well as other senior managers and staff. He was expected to gain around $720 million from the flotation, while co-founder Vikrant Bhargava, 32, PartyGaming’s marketing director expected around $200 million.

Two other major shareholders, former porn entrepreneur Mrs Parasol and her husband Russ de Leon, netted around $370 million each.

They had dinner with Chief Minister Peter Caruana last week at the Rock Hotel.

In 2004 PartyGaming had a turnover of just over $600m and made EBITDAR (Earnings Before Interest, Taxes, Depreciation, Amortization and Rent) of $388m US dollar of which 90% came from the poker site although they also have casino and bingo sites which make a 10% contribution that is substantial in its own right.

The business relationship with Gibraltar started August 2003 with some 12 to 14 staff. It now employs 160 employees in Gibraltar with twenty more having been given job offers and they are looking to hire another 50 mainly in the area of marketing.
Marketing covers ‘retention communication’ with clients who have been noticed playing less and player acquisition as well as media buying. It is partly done by automated emails and partly by phone.

PartyGaming is a Gibraltar based company, head officed in Gibraltar, with all key functions based here and all management and control of group takes place here.

Every company in the PartyGroup group but two is based in Gibraltar. These are the business outsourcing operation in Hyderabad, India where they do customer service, transaction processing and technical support under total direction from Gibraltar.

Then there is a marketing agency in the UK which is a wholly-owned subsidiary which does creative work and is a sort of in-house advertising agency. This is based in London.

The group's servers - a critical part of the business success are divided into two types ‘real’ and ‘play’ servers for poker and for casino and bingo. For casino and bingo the real servers – ones that people spend money on - are in Gibraltar and the play servers in Kanawake, Canada. This Indian reservation is a hub for online gaming servers.

For poker the real play is in Kanawake but the plan is to move them to Gibraltar soon. And the poker play – just a free fun site - is in London but will be based in Gibraltar in a few weeks.

Based at Europort and at Regal House PartyGaming say they are well pleased with the professional support they have had in Gibraltar and the regulatory authorities.

Related Links and Articles:

Online Poker Rooms - Listings in My Gibraltar Directory

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

01 July 2005 - Investors turn online Poker firm into retail giant

21 June 2005 - Gibraltar and USA clash over gambling

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

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

18 March 2005 - Online casino 888.com plans float

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