Online gambling site in a £5.8bn sterling play

3 Jun 2005

A Gibraltar-based online gambling portal has revealed plans to float on the London Stock Exchange later this month with a valuation of £5.8bn sterling. The valuation makes PartyGaming more valuable than British Airways and Boots.

If it succeeds, the float will be the biggest of its kind in London since William Hill, the bookmaker, went to market in 2002. The listing could also make the Gibraltar group’s founders billionaires.

The firm, which is based in Gibraltar for tax reasons, launched in 1997 and turned over US$222.6m in the first quarter of this year. The company’s PartyPoker website hosts up to 65,000 players at peak times.

The company’s founders include Anurag Dikshit, an Indian technology specialist, who owns 42pc (yielding him more than £2bn sterling if the float succeeds); Ruth Parasol, who once worked in the adult entertainment industry, owns 20pc as does her husband Russ DeLeon; and Vikrant Bhargava, marketing director, who owns 14pc of shares in the company.

It is understood that Dresdner Kleinwort Wasserstein is acting as sponsor, book runner and global co-ordinator but is expected to bring other banks to share the work.

Driven by the advent of broadband, online gambling has been gaining a global following, particularly in the UK, the US and in many parts of Asia and especially amongst women. Belfast woman Lee-Anne Smyth is understood to be earning £4,500 sterling a week from and has already paid for her £150,000 house outright.

It is understood that in the UK alone, according to Nielsen/NetRatings, online gambling has increased by 45pc compared with last year, with some 3.2 million people visiting gambling sites in February.

Irish bookmaker Paddy Power released figures earlier this year showing record increases in operating profit, turnover and earnings per share for 2005. Although betting shops represent the core of the firm’s turnover, turnover at the company’s internet division grew a full 80pc during the year.

A year ago another online betting firm with a presence in Gibraltar, Victor Chandler, launched tax-free betting services in Ireland as well as its first bricks and mortar presence, creating 50 Irish jobs in the process.

In terms of PartyGaming’s £5.8bn sterling float, the company appears to be reflecting a desire by gambling sites usually based in tax-free havens such as Antigua, the Isle of Man and Gibraltar to seek credibility by floating on reputable stock exchanges and establishing bricks and mortar fixed assets.

PartyGaming, with more than 50pc of the global online poker market, could be the first internet gaming group to enter the FTSE 100 and it appears other online gambling players may follow. Another Gibraltar based firm 888, one of the largest casino operators in the world, has enlisted Credit Suisse First Boston to complete a strategic review with a view to floating later this year.

By John Kennedy