Gambling News - July 2005 Edition

"Online Gambling Shares Climb 11% in Debut Day"

Public offering for PartyGaming shares more than three times oversubscribed!

On Monday, June 27 th, PartyGaming floated with shares priced at 116 pence ($2.12) a share, right in the center of the expected trading range. By the end of the day they had shot up by 11% and closed at 129 pence per share (or $2.35). Fears that PartyGaming’s debut on the London Stock Exchange would fail seemed totally unfounded. At the close of trading, the overall value of PartyGaming exceeded nine billion dollars, making it more valuable even than casino empires like Harrah’s Entertainment and Wynn Resorts and just about as valuable as MGM Mirage. If it is wholly successful, the flotation will make multimillionaires out of PartyGaming’s founders and many of its executives. Its founder, Ruth Parasol and her husband, J. Russel DeLeon, were both selling shares worth $370 million and Anurag Dikshit, the company’s group operations officer, was selling shares worth $720 million. Even after selling their stock the three will still retain large stakes in PartyGaming.

Richard Segal, chief of PartyGaming, says he believes the company will continue to grow. An indicator of its unrelenting growth is PartyGaming’s objective of targeting Europe and Asia. PartyGaming will focus on its bingo and casino operations in these regions. This end of their business has been largely ignored because of the boom in the online poker business, said Segal.

The public offering for PartyGaming was oversubscribed more than three times, a volume which indicates that American fund managers also bought shares. A PartyGaming spokesman, Ed Bridges, said that “shares are being sold to a broad international group of investors”. However he did not specify which countries or funds participated in the purchasing.

It was not possible to verify whether the large U.S. funds such as Fidelity, Putnam, and Vanguard participated in the offering, due, in all probability to the misty legal status of Internet gambling in the United States. Britain has now legalized and welcomed the online gambling industry and in an effort to lure operators from offshore locations to Britain, has established a gambling commission to oversee the business. The legalization has led to a virtual explosion of marketing among gambling sites in Britain with several Internet gambling businesses announcing their intention to follow the PartyGaming example and float later this year on the LSE. Two such companies that have announced their intentions to go public are Gala and 888.com.

PartyGaming’s size may be such that it will be included in the September FTSE 100 index, which tracks the largest listed companies in Britain. Could this force funds that invest in the index to buy stakes in a business that is not legal at home? The fear of threatened repercussions from legal authorities in the U.S. kept the big American financial institutions from participating in PartyGaming’s offering, but the American fund managers with a British focus may still find themselves in an arguable situation.

Back to Online Gambling News Home