(Click Here for the Latest Online Poker News Stories)
Copyright 2005 The Telegraph Group Limited
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
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
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
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."
(Click Here for the Latest Online Poker News Stories)