PartyGaming Investors Unfazed By US Regulatory Risks

by Jason Gorringe, Tax-news.com, London

23 June 2005

Plans by Gibraltar-based PartyGaming, the world's largest online poker provider, to float on the London Stock Exchange will go ahead as planned next week after investors and fund managers brushed off concerns over the possibility of new legislation in the United States which aims to restrict online gambling.

By the close of trading on Tuesday, it emerged that PartyGaming's initial public offering was fully subscribed, valuing the firm within its indicative price range of $8 billion to $9.2 billion.

New legislation being dawn up by US Senator John Kyl, a Republican from Arizona and long-time opponent of gambling over the internet, seeking to prohibit banks from handling online betting transactions, had cast doubt over whether investors would have appetite to buy PartyGaming's shares, especially after the firm admitted that 90% of its revenues are derived from US customers. This prompted speculation last week that PartyGaming would be forced to cut its valuation or scrap the IPO completely.

However, it would appear that PartyGaming's healthy profit margin, which is expected to reach $533.2 million in 2005 on revenues of $974 million, have proved too much of a lure for investors to turn down.

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