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Old 08-08-2005, 12:25 PM
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Default Re: PokerTek - real company or scam?

If it's going through with an IPO, it's probably a real company. There are a couple warning signs (very high insider ownership, only founded 2 years ago) that make me wonder. You'd have to look at the rules for insiders selling stock to see. Basically you want to know if they can dump their shares as soon as it IPOs.

That doesn't mean it's a good investment. An automated poker table is a good idea, and would save on dealer costs, but there are a lot of problems.
1. Dealers aren't that expensive for the casino. A lot of the dealers' income is from tips. Let's say the dealers make $10/hour including benefits. Replacing them will could save the casinos $160/day/table. However, there will be new costs of maintenance. Also, there will still have to be some kind of assistance on the floor to prevent collusion.
2. Will players want to play there? Inexperienced players will want to play someplace where their questions can be answered by the dealer. Experienced players probably don't care too much, but they mainly want to play where the inexperienced players play.
3. Is the market large enough? It looks like they're charging $6000/table. It's hard to tell if this is a monthly, annual, or one-time fee. It's hard to imagine it's a monthly fee, because the casinos can't be saving too much money with this. Let's assume the profit margin is something like $3000/table. In order to wipe out their debt, they'll have to sell about 1000 tables. That means they'd have to replace the majority of the poker tables in the US, just to break even. Just 998 to go...

Stay far away.
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