Gambling News - June 2005 Edition

"Online Gambling Site PartyGaming to Float IPO"

PartyGaming plans to float on London Stock Exchange. Could be one of the largest public offerings in the recent history of the LSE.

PartyGaming, based in Gibraltar, announced its intention to float on the London Stock Exchange by the end of June 2005 amid predictions that the flotation could place the value of the company between eight to eleven billion dollars. This would make PartyGaming one of the largest publicly traded concerns in the United Kingdom. About a quarter of the shares that will go up for sale now belong to PartyGaming shareholders. PartyGaming, operates such sites as PartyBingo, PartyPoker, and Starluck Casino. The filing could be one of the largest public offerings in the recent history of the London Stock Exchange.

PartyGaming attracts players to its Internet gambling websites from all over the world, including citizens of the United States where PartyPoker is immensely popular. But its popularity in the U.S. is in direct conflict with the U.S. Government’s policy on Internet gambling, which it resolutely prohibits. The U.S. prohibition on Internet gambling is not without opposition both nationally and internationally. Not long ago, the tiny island nation of Antigua, where many online gaming businesses are based, filed suit at the WTO against the U.S. for unfair trade practices. Antigua argued that U.S. policy against online gambling is biased because the U.S. does not outlaw domestic gambling businesses. The U.S. countered that it had the right to ban online gambling in order to uphold public order and public morale among its citizens.

The WTO’s initial ruling on the case and its subsequent appeals decision left the status of the U.S. position on Internet gambling unclear and allows both countries to claim victory. The ambiguity of the ruling gives rise for concern about the fate of the Internet gambling industry, but most argue that the demand for Internet gambling is huge and that there is too much momentum behind the industry’s growth to stop its phenomenal expansion.

Javad Heydary, a Toronto-based lawyer and the managing editor of Laws of Dot Com, believes that eventually the U.S. will have to start explicitly regulating Internet gambling businesses and allow them to operate, but under strict rules and conditions, just as the U.K. has done, instead of just banning the industry outright.

In fact, the picture looks quite rosy for the Internet gambling industry in general. A gambling consultant company, Christian Capital Advisors, estimates that the online gaming market will at least double in the next five years, growing from $12 billion this year to $24 billion by 2010. This is similar to the incredible growth experienced by traditional e-commerce in its earliest days.

As for PartyGaming, their financial statistics look very promising. In year 2004, the company said its revenues were $600 million, nearly five times what it was in 2003. PartyGaming posted a net income of $350 million in 2004, up fourfold from earlier levels. Finally, in just the first quarter of 2004, sales were at $222 million, almost double what they were in 2004.

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