Party IPO - The Smartest Poker Players in History?

[midas]

Although I have not seen the prospectus, I'm assumming the founders of Party will be billionaires on paper and possibly in cash after the IPO.

A few questions for the masses:

1. Are these guys the smartest players in poker history? I say yes - they are selling poker to the masses rather than playing.

2. How many of the big guns in poker would trader their bracelets and poker fame to be a founder of Party? I'll bet every one of the WSOP winners would trade their bracelets for a cool billion.

3. Did these guys get a little lucky? I mean without the tiny cameras and the poker explosion is the Company that successful or was Party and the other competitors the catalyst for the boom in poker.

[ipp147]

I don't think that they will be billionaires. They certainly won't have to work again though!

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1. Are these guys the smartest players in poker history? I say yes - they are selling poker to the masses rather than playing.

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They didn't come up with the concept of internet poker nor "selling" it to the masses. So no.

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2. How many of the big guns in poker would trader their bracelets and poker fame to be a founder of Party? I'll bet every one of the WSOP winners would trade their bracelets for a cool billion.

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No idea

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3. Did these guys get a little lucky? I mean without the tiny cameras and the poker explosion is the Company that successful or was Party and the other competitors the catalyst for the boom in poker.

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Currently they market their site the best and have the biggest player pool. I think that there market share will increase but their market lead will decrease.

The internet is the catalyst for pokers "boom". I wouldn't call them lucky, they saw a growing market and built themselves into the number 1 provider in that market.

[TylerD]

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I don't think that they will be billionaires.

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Oh yes they will:

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ANURAG DIKSHIT

Very little is known about the 33-year-old computer whizzkid who created the technology behind online poker. He is a graduate of the Indian Institute of Technology in Delhi, and he was working as a software developer in the US for various companies when he hooked up with Ruth Parasol in 1998. He owns 40 per cent of the company, which is said to be worth around £2.2bn.

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RUTH PARASOL

A Californian lawyer whose first business exploits were in an even more controversial arena than poker. She made millions in the early 1990s from premium-rate adult chatlines and pornographic websites. By 1997, however, she had severed her ties with porn and hit on the idea of online poker.

RUSS DE LEON

Harvard law graduate who is Parasol's husband and co-shareholder. The pair now live in Gibraltar with their two children. They no longer play any part in running the business, but act as consultants, especially with the legal side of the business. Their combined stake is worth around £2bn.

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The Independent newspaper Story (http://news.independent.co.uk/business/news/story.jsp?story=643677)

[midas]

Oh my mistake - they're only UK pound billionares, I'd rather have the WSOP bracelets /images/graemlins/wink.gif

[Kevmath]

1 UK pound = 1.81 US dollars, so yes they would be multibillionaires on paper.

Kevin...

[sexypanda]

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ANURAG DIKSHIT

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Haha, you said Dikshit.

[Matt Flynn]

Anyone understand why a very high cash flow business like PartyPoker would IPO? It seems like a lack of sophistication on their part. Why endure the hassles of regulation when your current cash flow exceeds what you would reasonably make off your ownership assets even if you liquidated on Day 1 and invested well.

Matt

[midas]

Matt - companies IPO (sell public stock) because the public markets give you a better valuation (price) than a private sale. Also, Party can then use this currency to buy other poker sites or other B&M casinos as well. I also think there is a risk (maybe small) that the U.S. could shut down this type of business thus making it easier to go public rather that sell to another large casino company which may not want to take this risk.

[Matt Flynn]

Capital for expansion I get. The other reasons would never get me to sell a business that generated such a huge cash stream unless I got at least 12x the annual profits or expected the business to decline or become encumbered.

Matt

[pokerlaw]

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The Independent newspaper Story (http://news.independent.co.uk/business/news/story.jsp?story=643677)

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One hard to believe quote from that article:

"Women are particularly seen as vulnerable [to gambling addiction]. Almost 40 per cent of those playing poker online are women..."

I wonder where they got that info? good article regarding some technical aspects of the IPO I havent read anywhere else yet though...

[TheWorstPlayer]

Matt, if they want to get out it's not going to be very easy to sell off a 2BN company and it will also cost a lot. Easier to just sell shares to the public. That way they can keep some ownership share and benefit from future success even if they stop running the company themselves. No?

[B-Man]

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Anyone understand why a very high cash flow business like PartyPoker would IPO? It seems like a lack of sophistication on their part. Why endure the hassles of regulation when your current cash flow exceeds what you would reasonably make off your ownership assets even if you liquidated on Day 1 and invested well.


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Matt,

The IPO is a no-brainer if they can really do it at a valuation of $10 billion:

1. $10 billion is over 26 times last year's earnings, so they are getting a good price.

2. I think they are selling at the optimum time--the explosive growth of poker can't continue forever, eventually the weaker players lose too much money and quit. Also, if the U.S. bans internet poker, they will lose a huge chunk of their customers in the blink of an eye.

3. Liquidity.

4. Diversification.

[Matt Flynn]

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The IPO is a no-brainer if they can really do it at a valuation of $10 billion:

1. $10 billion is over 26 times last year's earnings, so they are getting a good price.

2. I think they are selling at the optimum time--the explosive growth of poker can't continue forever, eventually the weaker players lose too much money and quit. Also, if the U.S. bans internet poker, they will lose a huge chunk of their customers in the blink of an eye.

3. Liquidity.

4. Diversification.

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Ok makes sense. Who the heck would buy that though is beyond me. Reminds me of shorting Palm when it IPO'd.

Matt

[TheWorstPlayer]

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The IPO is a no-brainer if they can really do it at a valuation of $10 billion:

1. $10 billion is over 26 times last year's earnings, so they are getting a good price.

2. I think they are selling at the optimum time--the explosive growth of poker can't continue forever, eventually the weaker players lose too much money and quit. Also, if the U.S. bans internet poker, they will lose a huge chunk of their customers in the blink of an eye.

3. Liquidity.

4. Diversification.

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Ok makes sense. Who the heck would buy that though is beyond me. Reminds me of shorting Palm when it IPO'd.

Matt

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And google

[driller]

You do an ipo and put about a billion (admittedly in stock) in your pocket plus retain control of the company and all its earnings. What's not to understand?

[BadBoyBenny]

Matt,

The total valuation will be well more than 12 times their earnings. Also, the founders are keeping 40% shares of the company. They can diversify the other 20% of their assets which is probably a good move because there is a lot of risk in their business.

Edit:

This also allows them to reward their employees with stock options and early access to the shares. My assumption is that this was part of their decision.