Investors have shrugged off fears that regulatory barriers may shut off Gibraltar-based PartyGaming's access to the lucrative United States market as the firm's shares soared during its first day's trading on Monday.
After completing the largest ever flotation on the London Stock Exchange, PartyGaming's shares finished the day 13% above its 113p listing price at 130.5p, with the initial public offering three times oversubscribed. By the end of Monday, the firm's market capitalisation stood at £5.2 billion - more than long established companies such as Marks & Spencer and British Airways.
The firm's four founders and owners, Anurag Dikshit, Ruth Parasol, Russ DeLeon and Vikrant Bhargave, pocketed a total of £1 billion (EUR 1.5 billion) by selling parts of their stake in the eight-year-old company. Mr Dikshit retains a stake of about 31%, worth more than £1.5 billion.
The company was the subject of much negative publicity ahead of the float as analysts pointed to concerns over the legal situation in the United States, where internet gambling is outlawed. PartyGaming, which operates the PartyPoker website, derives around 90% of its income from US-based punters. Legislation has also been proposed by Arizonan Senator John Kyl to prevent banks from handling online gaming transactions.
However, the firm's chief executive Richard Segal has pointed out that current US legislation bans online sports betting, not online poker.
"What we do does not violate any federal law. US case law supports the view that internet poker is not illegal, only internet sports betting," he stated.
Segal was also unconcerned at the new proposals by Senator Kyl.
"There have been seven attempts to stamp out online gaming in the US, and none have been successful. We are satisfied that what we do is not illegal, and we have no physical presence in the US," he explained.
The firm now plans to target the European, Asian and Australian markets.
A comprehensive report in our Intelligence Report series examining offshore e-commerce and online gaming is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report6.asp
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