The Biggest News in Poker

Many think the biggest news in poker this summer was the record-shattering attendance at the 2005 World Series of Poker. Don't believe it. PartyGaming, the company that owns the world's largest online poker room (PartyPoker.com) went public on the London Stock Exchange (PRTY) on June 27, 2005. From a historical significance in the poker world, that will prove to be substantially bigger news over time.

Vikrant Bhargava, PartyGaming director of operations

Before it went public, PartyGaming put an initial value on the company of around $8.5 billion. It was going to sell only 20 percent of its stock in the initial public offering. The company handling the float (Dresdner, Kleinwort, & Wasserstein) had the option to sell another 3 percent of the shares if the initial order was met, and that's what happened. (If you live in the United States, you couldn't buy shares.)



Immediately prior to PartyGaming's IPO (initial public offering), there was some negative press (fear about U.S. laws), but that didn't seem to slow down demand for shares. Some premier investment companies saw PartyGaming as a prime investment opportunity, and took it. By the time the IPO came out, they had more than triple the subscriptions necessary to fill the order. The stock climbed 30 percent the first couple of days, and approached a 50 percent increase in value the first month! It remains there.



According to Forbes (as published in Gaming Today on July 26), there are 12 billionaires in the gaming business. That list is headed by Sheldon Adelson ($11.9 billion) and Kirk Kerkorian ($9.5 billion), and includes familiar names such as Steve Wynn, Donald Trump, and William Boyd. Amazingly, four on that list – the Dream Dozen – are from PartyGaming. The first of the online billionaires are Anurag Dikshit, Ruth Parasol, Russ de Leon, and Vikrant Bhargava. (For your info, PartyPoker.com, the world's largest online poker site, was launched in August 2001. It represents 92 percent of PartyGaming's business.)



You might be wondering why prominent investment firms would risk investing in online gaming, considering questionable U.S. laws. Well, no one playing online poker has ever been charged with a crime, and investment groups don't see it happening in the future.



If you were at the Rio during the WSOP, you will recall the sea of poker tables that filled the room. It was quite a sight. Now, multiply the size of that room by 50 and you'll get an idea of how big a room it would take to host the daily games played on PartyPoker.com (more than 70,000 simultaneous players nightly). The point is that online poker has experienced tremendous steady growth since its inception. Prudent investors recognized that, came on board, and envision an even brighter future.



Here's something that may mildly shock you: PartyGaming did not go public for the money. That's hard to believe, but it's true. It simply wanted to bring credibility, accountability, and trust to the online gaming business. And did it ever!



The ripple effects of PartyGaming going public are far more than you can imagine. It has brought certifiable credibility and legitimacy to online gaming.



Congratulations to PartyGaming for "making it happen". I have no doubts that many online companies are now checking out float possibilities. I don't see many sites being able to go public, however. Getting in the float parade is not very easy.



Take care.

Mike Sexton is the host of PartyPoker.com, a commentator on the World Poker Tour (which can be seen every Wednesday on the Travel Channel), and the author of Shuffle Up and Deal (which is on The New York Times best-seller list).