CYBERSPACE – The world’s biggest online gambling company, PartyGaming PLC, owner of PartyPoker.com, made a strong debut on its first day of trading on Monday as one of the biggest listings on the London Stock Exchange, valuing the company at an estimated $8.46 billion.Party Gaming was originally founded in 1997 by Ruth Parasol. In 1998, she connected with Indian computing wizard Anurag Dikshit, who now owns 42 percent of Party Gaming, to design the technology behind the firm.
Their flagship site, PartyPoker.com, was launched in 2001. At that time the industry was dominated by ParadisePoker.com. But within three years it had captured a whopping 55 percent of the market, according to industry data. The company is now at least seven times bigger than its nearest competitor, Pokerstars.com.
Party Gaming claimed revenues of $222 million in the first quarter this year, up 93 percent from a year earlier. Operating profit jumped 81 percent from a year earlier to $128 million. The company makes the bulk of its money on the “rake” from the pot in a poker game, a maximum 2 percent deduction of bets placed during a hand.
Although the company has offices in London and the majority of its 1,100 employees are based in India, Party Gaming is headquartered in Gibraltar, providing tax advantages and keeping it out of reach – for the time being – of the U.S. government, which has not looked kindly on the online gambling business.
Although there is no federal law in the States explicitly barring online gambling, and it is legal to operate a site from outside the United States, the Justice Department has been trying to crack down on the business by claiming that online gambling operators are in breach of federal laws and may be arrested and prosecuted in the United States.
One legislator, Sen. Jon Kyl (R-Ariz.), has crafted a bill that prevents banks and credit-card companies from allowing U.S. customers to use their accounts for online bets.
Online payment service PayPal has also declined to accept transactions from online gambling companies. Search engines like Google and Overture have stopped accepting advertisements from online gambling sites.
Concerns about efforts by U.S. regulators don’t seem to factor too highly in the projections. The popularity of online poker has mushroomed in recent years, with some credit going to younger and female players who may be more comfortable playing online than in a casino.
