PartyGaming

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PartyGaming plc
Type Public
Founded 1997
Headquarters Gibraltar
Key people Michael Jackson, Chairman
Mitchell Garber, CEO
Industry Online Gaming
Revenue ▲ US$978 million (FY2005)
Net income ▲ US$293 million (FY2005)
Website partygaming.com

PartyGaming Plc (LSE: PRTY) is an online gambling company, best known for its online poker room PartyPoker.com. It is headquartered in Gibraltar and quoted on the London Stock Exchange. PartyGaming Plc was founded in 1997 with the launch of Starluck Casino. Prior to passage of anti-online gambling legislation by the U.S. Congress, PartyGaming Plc was the world's largest online poker brand (based on ring game revenue and number of players); though its total number of active players has diminished with the loss of its U.S. customers, the company continues to grow with a solid European presence.[citation needed]

Contents

History

PartyGaming was founded in 1997 as a network of gambling sites operated by Ruth Parasol in the Caribbean. The network eventually operated under an umbrella company called iGlobalMedia, which then changed its name to PartyGaming. PartyGaming's flagship site, PartyPoker.com, was launched in 2001. Its primary shareholders are Parasol, Group Operations Director Anurag Dikshit, Marketing Director Vikrant Bhargava (who joined the company in 1998 and 1999, respectively), and Russ DeLeon (Parasol's husband, Harvard attorney and serial entrepreneur). The foursome sold over 23% of their combined shares to take the company public on the London Stock Exchange in 2005. Dikshit and Bhargava stepped down from the company's board in May 2006. Dikshit announced that he will remain with the company as COO; Bhargava will continue as an advisor and shareholder of the company while pursuing other business interests.[1]

PartyGaming's holdings include the PartyPoker.com poker site, PartyCasino.com, PartyBingo.com, and Starluck and Planet Luck Casinos. In February 2006 PartyGaming introduced a new integrated platform, enabling multiple games to be played without requiring customers to log in each time and deposit funds in separate accounts. An online backgammon site, PartyGammon.com, was launched in mid-2006. In August 2006 PartyGaming acquired Antigua and Barbuda registered sports betting operator Gamebookers which focuses on the European market.

Due to concerns about the legality of online gambling in various jurisdictions around the world, the company is incorporated in Gibraltar. At one point, U.S. consumers represented around 75% of PartyGaming's revenues. In October 2006, PartyGaming pulled out of the US market following the passing of anti-gambling measures in the Safe Port Act, and the company's share price dropped 60% as a result.

PartyGaming IPO

In June 2005, some of the top shareholders of PartyGaming plc sold 23% of the company's stock in an initial public offering on the London Stock Exchange. The initial offer price of 116p valued the company at £4.64 billion ($8.46 billion). Within a month the share price rose to make the value of the company exceed twelve billion dollars. In early September 2005 a cautious statement about future growth prospects saw the shares fall by a third in a day, but the same week the company was promoted to the FTSE 100 Index. By the end of November 2005 the stock had regained its original IPO value. Profits for 2005 were $325 million before tax.

During the IPO, no new shares of PartyGaming were issued, and the company did not receive any additional capital as a result. Rather, shares merely changed hands with the four shareholders reducing their shares to benefit employees. The company remains a volatile stock and a growth situation as so little of gaming revenue is currently online. It is estimated that the online gaming market generated revenue of approximately $8.2 billion in 2004, representing just over three per cent of the total global gaming market. In 2004, casino and bingo games represented approximately 29 per cent of the online gaming market, and poker represented approximately 13 per cent. Dresdner Kleinwort Wasserstein Limited serves as PartyGaming Plc's financial advisor.

PartyPoker.com

PartyPoker.com was launched in 2001 and has since grown to be one of the largest online poker card rooms. At peak times, tens of thousands of players can be found playing on the site's virtual poker tables. The site is endorsed by Mike Sexton, the host of the World Poker Tour television show. The domain partypoker.com attracted at least 3.6 million visitors annually by 2008 according to a Compete.com study.[2]

Games include Texas Hold 'em (No Limit and Fixed Limit), Omaha and Omaha Hi-Lo, Seven-card Stud and Seven-card Stud Hi-Lo. A new variant of Texas Hold'em called Hellkat is also played.[3] Hellkat is a single table tournament where the prize money is divided amongst the three highest stacks after only 5 or 15 minutes play. Stakes range from 0.05/0.10 to 100/200 for limit games, and 0.02/0.04 to 25/50 for No-Limit/Pot-Limit games.

Players can play for either real money or play money. All poker variants offered at real money tables are offered at play money tables. Party Poker offers a bad beat jackpot, which has at times grown to over $700,000 USD.

Party Poker makes money by taking a percentage of each ring game pot (this is known as the rake) and approximately 10% of entry fees for each real-money tournament. The site has dealt over six billion real money hands and over fifty-five billion play money hands, including tournaments.

Party Poker is the official kit sponsor of Leyton Orient football club, of the English Football League One.

Party Poker offers hand history files for analysis, discussion and conversion using a poker hand converter.

Tournaments

The site offers a variety of tournaments, ranging from two to thousands of participants with some very lucrative prize pools.

Single-table and multi-table tournaments are offered. Furthermore, there are both scheduled tournaments (which begin at a specified date and time) and tournaments which are offered 24 hours a day and begin as soon as the table is full. The latter type of tournament is commonly called a "Sit 'n Go" or "SNG" tournament.

The flagship tournament is the PartyPoker.com Million Tournament, a Limit Texas Hold'em Tournament. The second, third and fourth Party Poker Million tournaments were World Poker Tour events. The tournament begins with online qualifiers but the final stages are held at actual poker tables aboard a cruise ship. The winners of previous Party Poker Million events were Kathy Liebert, Howard Lederer, Erick Lindgren, Michael Gracz, and Mike Schneider.

Additionally, there are play money tournaments, but the offerings are not nearly as extensive as the real money tournaments and mostly consist of single table events.

Every player is limited to playing up to twelve tables simultaneously.

Hellkat

Hellkat is a form of Texas Hold 'Em poker developed by PartyPoker.com. The games are played in the same way as a normal Texas Hold 'Em tournament, except that there is a time limit of 5 to 15 minutes when the tournament will end. At the end the prize money is paid to the three players with the most chips. Because of the time limit, the players with the lower stacks play fast and furiously going all-in often as the time runs out.

Split with "skin" partners

In its early days, PartyGaming entered into several marketing partnerships that allowed companies such as Empire Online, who ran Empire Poker, to share in a common pool of poker players. Players could access the PartyGaming network either through the PartyPoker.com software itself or through the software of one of PartyGaming's "skin" partners.

In mid-2005, PartyGaming made various moves to ringfence its own players from those of the "skin" partners. The company began to explore mergers, buyouts, and other options. In October of that year, PartyGaming launched an upgraded PartyPoker.com software system that cut off the "skin" partners from the main pool of players, and left the "skin" players on the old system.

In November 2005, offer discussions with Empire Online were terminated, and on 6 December 2005, Empire Online confirmed that it had started legal proceedings against PartyGaming in the High Court of Gibraltar. On 14 February 2006, the two companies announced a US$250 million settlement deal; PartyGaming agreed to acquire Empire's "skin" operations, and Empire dropped the suit.[4] In December 2006, PartyGaming announced the acquisition of the remaining assets of Empire Online.[5]

PartyGaming also acquired the operations of former "skin" partners IntertopsPoker and MultiPoker, in separate private transactions for undisclosed amounts.

PartyPoker.net

PartyGaming operates PartyPoker.net, a free site that, when PartyGaming offered real money gaming in the United States, was advertised on United States television as "the world's largest poker school" due to restrictions of directly advertising gambling sites. Prizes are offered for winning tournaments on the site. Although no money is exchanged, an age limit of 18 (or 21 in some states) is still enforced. Players on the .net site play the same games as players playing the free games from within the PartyPoker.com software client.

iGlobalMedia software

In the 1990s, Las Vegas consultant and actuary Michael Shackleford ran a computer trial of the first blackjack and roulette games offered by iGlobalMedia. Shackleford stated that the "results clearly showed they (the games) weren't fair. Ruth Parasol's spokesman Jon Mendelsohn acknowledged that the chances had "tipped too much toward the house", but attributed the problems to "software flaws", not rigging. It led to the development of their own proprietary software rather than using external platforms.[6] There was no reimbursement to the players iGlobalMedia allowed to play the unfair games.

US players

On September 29, 2006, the U.S. Congress passed the Safe Port Act. Senator Bill Frist successfully lobbied to attach unrelated anti-gambling language to the act; this language is known as the Unlawful Internet Gambling Enforcement Act.

On October 2, 2006, PartyGaming announced that it would "suspend all real money gaming business with US customers" in light of the passage of the Safe Port Act.[7] George W. Bush signed the act into law on October 13, and PartyGaming suspended offerings of real-money games to U.S. players. Free play games and non-US customers were not affected.[8]

As a result of this news being released to investors, PartyGaming's publicly traded stock dropped almost 60% in 24 hours. The company was moved from the FTSE 100 to the FTSE 250 Index on October 11.[9]

Notes

  1. ^ Forbes: PartyGaming's Dikshit quits board
  2. ^ PartPoker attracts almost 4m visitors online yearly
  3. ^ PartyPoker.com: HellKat
  4. ^ Globes Online: Empire Online reaches settlement with PartyGaming
  5. ^ Guardian: PartyGaming to acquire Empire's online assets
  6. ^ Los Angeles Times: Woman Billionaire Made Fortune Selling Vice on the Internet. Published November 27, 2005
  7. ^ PartyGaming: United States Legislation (PDF file)
  8. ^ Life Style Extra: PartyGaming Suspends All US Gaming Activities. Retrieved 13 October 2006
  9. ^ The Guardian: PartyGaming drops out of FTSE 100. Retrieved 9 October 2006

See also

External links