Gambling News - July 2005 Edition

"Internet Gambling Firm Overtakes British Airways"

PartyGaming floated on the London Stock Exchange. Company value rises to five billion pounds.

The successful flotation and valuation of PartyGaming on the London Stock Exchange puts the company worth higher than two of Britain’s largest businesses, British Airways and the retailer, Boots. PartyGaming, the Internet gambling company that owns and operates PartyPoker.com, has successfully floated and has already seen its value rise to about five billion pounds. PartyGaming shares were 116 pence per share at launching and by the end of the day had risen to 129 pence per share.

The opening flotation price of 116 pence per share fell within the 111 to 127 pence range indicated by the Gibraltar-based company just prior to its actual flotation. It was a little more conservative than many in London had been anticipating.

This company value virtually guarantees PartyGaming’s admission to the FTSE 100 index in the autumn. PartyGaming’s chief executive officer, Richard Segal, was elated by the reception of the company’s flotation by the United Kingdom and international institutions. “The listing reinforces the group’s position as one of the world’s leading online gaming companies and enhances the group’s profile as we set out on international expansion”, commented Segal.

Because of the extraordinary growth in the online poker industry, PartyGaming had concentrated its efforts on developing PartyPoker and had largely ignored the growth of its Starluck Casino and PartyBingo sites. Now as part of its expansion effort, PartyGaming will concentrate on developing its other gaming brands, including Starluck Casino and PartyBingo. PartyCasino is expected to be launched sometime at the beginning of next year. It is proposed to use common software and cashier systems and this will allow customers to play all of the available games on one platform.

The initial offering was made available only to large institutional investors, to the disappointment of many potential investors. Full public trading became available a few days later. However, not all fund managers are enthusiastic about recommending purchasing shares in PartyGaming, and Barclays and Clay is one such fund manager. Barclays and Clay had warned its clients that there are “too many unanswered questions” related to the future prospects of PartyGaming for it to confidently recommend the stock.

Other fears such as the growing competition within the online gambling industry and the thought that the popularity of online poker is just a passing fad also affected this decision.

Concerns center on the legality question of online poker in the United States where PartyGaming generates 90 percent of its revenues. The clear possibility that legislation prohibiting online gambling may be introduced is raising fears regarding PartyGaming’s ability to continue generating its revenues.

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