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Copyright 2005 The Telegraph Group Limited
SUNDAY TELEGRAPH(LONDON)

March 20, 2005, Sunday

HEADLINE: PartyGaming shows its hand A founder of the stupendously profitable and secretive online poker business gives his first interview, to Andrew Alderson, as it cruises towards a pounds 3bn float

BYLINE: By ANDREW ALDERSON

BODY:
The Oosterdam, a luxurious Dutch cruise ship, slipped out of the southern Californian harbour of San Diego last night with 725 of the world's best poker players, including 20 Britons, on board.

Over the coming week, as the 950ft, 85,000 tonne ship cruises at a top speed of 24 knots to the Mexican Riviera and back, the players will compete for prizes worth more than $7.2m ( pounds 3.8m).

The event is being billed as the "world's largest 'limit' Texas Hold 'Em tournament; Texas Hold 'Em is the most popular form of on-line poker and "limit" means that the players are restricted by how much they can raise another player during a hand. The players, most of whom have qualified in preliminary tournaments on the internet, will challenge for a minimum first prize of $1.5m ( pounds 789,000).

The cruise has been organised by PartyGaming, one of the most phenomenal business success stories of recent times and the company which has helped poker shed its sleazy image of being enjoyed only by steely-eyed card sharps playing all-night sessions in smoke-filled drinking dens.

Today, partly due to the enthusiasm for the game from the likes of Sarah Jessica Parker, the actress from Sex and the City, poker has a new cool and sophisticated image - as well as providing the potential to make millions, even billions, for those who are capitalising on its popularity.

Four years ago, PartyGaming launched an internet poker website offering gamblers around the world the chance to bet anonymously and safely in a friendly on-line environment for almost any stakes they wish. The company makes its profits from its "rake" from the pot - a maximum 2 per cent deduction of all the wagers placed during a hand.

PartyGaming has grown from a company employing a handful of staff in 2001 to one which today employs 1,000 people and which last year made a profit before interest, tax and depreciation of more than $350m ( pounds 184m).

This summer PartyGaming is expected to float on the London Stock Exchange - and analysts are predicting that it will be worth a remarkable pounds 3bn.

Most companies planning a stock market listing are keen to get as much publicity as possible. PartyGaming's four co-owners prefer to let the company's results do their talking while they remain in the shadows, and based in Gibraltar, where the Government has a relaxed attitude to gambling regulations.

For the past four years, the founders of the company - two American and two Indian entrepreneurs - have fiercely guarded their privacy. They rarely give interviews and three of the four refuse to release photographs of themselves while their names are conspicuously absent from the website, PartyPoker.com.

So who are the three men and one woman, all in their 30s, behind what is arguably the greatest business success story of the 21st century? And what do they each, in poker parlance, bring to the table?

If her past is any guide to the future, Ruth Parasol can expect to make a fortune in future from sloth, gluttony, envy, pride, and wrath. To date, she has centred her business interests on two of the seven deadly sins - lust and greed - and they have provided her with riches beyond the dreams of most people.

Her decision to invest in the "adult entertainment industry" in the US in the 1990s earned her millions of pounds. She set up premium rate adult chat lines and pornographic websites before severing all her links with the industry in 1997 in order to switch to on-line gambling.

Parasol, a lawyer, is credited with being the inspiration behind PartyPoker.com, the world's largest poker room.

Parasol, like her three co-owners, is not a poker player. She is married to Russ de Leon, a fellow American and a Harvard law school graduate, who is also a co-owner of PartyGaming. The couple, who have two children, act as consultants for the company and deal with the legal side of the business.

Meanwhile, Anurag Dikshit, a graduate from the Indian Institute of Technology, is the computer expert in the company and the second co-founder. Dikshit, who is married with one child, devised the original software for PartyPoker.com and currently works as its group operations director.

The fourth co-owner is Vikrant Bhargava, 32, who went to the Indian Institute of Technology at the same time as Dikshit, and has a background in banking. He joined Party-Gaming in 2000 to handle the marketing side of the business. Bhargava, a married man with two children, said that when he joined the company it was involved in on-line gambling, but it already had aspirations to become involved in on-line poker. "Early on we identified online poker as a cool business - something that we thought had real potential. The first on-line poker room went up in 1998 but in May 2000 we went to a poker conference in Montreal to learn more about the industry. We came back from Canada convinced that this was an area we should look at more closely."

When PartyPoker.com was launched in August 2001, Paradise Poker dominated the online poker world. A year later, however, PartyPoker.com had won over 15 per cent of the world's on-line poker business and within three years - the end of 2004 - it had a staggering 55 per cent of the market. "We were in the right place at the right time and we did a few things well," said Bhargava. "But none of us could ever have predicted what has happened to the business - it has grown faster than we ever thought possible. We have never had a dull day - it's been exciting and fun all the way."

In 2000, there were just a few thousand registered players. Today PartyPoker.com and its linked websites have 5m registered players who are able to play around the clock. At peak times, 75,000 people play on the site. "We had a unique launch plan where we hired a cruise ship for 100 players and we promised that one of them would leave the ship a week later with a pounds 1m first prize. That generated huge interest," said Bhargava. "People like Party.Poker.com because it is fun, easy, it involves skill and people can play for whatever stakes they want to - high or low. Unlike poker played at a table, you don't have to sit down and have someone blowing smoke in your face. When you play, you can chat on-line to other players or you can play poker in silence."

In 2003, PartyGaming switched its headquarters from the Dominican Republic to Gibraltar. Today, 100 staff work from an non-descript first-floor office on Gibraltar and a further 900 staff work in India, where the customer service department is based.

Today the future for Party- Gaming looks rosy. In January this year, it announced it had retained the two investment banks, Dresdner Kleinwort Wasserstein and Investec, to look at its "strategic options". A float on the London Stock Exchange is not the only option open to PartyGaming. A rival poker internet company may launch a bid for the company: last year Sportingbet paid $297m ( pounds 156m) for its rival website Paradise Poker, a move which saw its share price double. However, few, if any, rivals could afford to buy PartyGaming outright.

If, as expected, the float takes place this summer, its bankers are predicting that the company will leap into the FTSE100 Index.

Some analysts, however, think the pounds 3bn estimate of the company's worth may be too high. They predict increased competition as other companies, including Betfair, the betting exchange and the British gambling success story of the last decade, set up their own poker websites.

Iain Wilkie, a partner with Ernst & Young, the accountants, who has worked in the gaming sector for 10 years, said: "PartyGaming has a fantastic customer database, knows how to operate on-line gambling securely and knows how to attract and keep customers with a variety of games. But its ultimate worth may depend on how much of its revenue comes out of the US market."

What Wilkie is referring to is the paradox that the US is the world's largest online gaming market, even though the legality of internet gambling is unclear. No licences have been granted for internet gambling by the US authorities and there is speculation that they may try to regulate offshore online companies in the future.

Whatever PartyGaming's future holds, 725 poker players on board the Oosterdam were last night hoping to become a dollar millionaire in the next week. They include Martin Sandler, 42, a lawyer with a City investment bank, who has been practising his skills for the past month on PartyPoker.com. He said: "I get an immense amount of satisfaction from outwitting my opponents - and winning money. I am going to give it my best shot."

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