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Old 12-31-2005, 07:00 AM
Sniper Sniper is offline
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Default WPTE - Motley Fool comments on Lipscomb letter to poker players

On WPTE CEO Steven Lipscomb's letter
WPT Enterprises (Nasdaq: WPTE) CEO Steven Lipscomb did something interesting last week: In a noble effort to reach out to poker players, he wrote an open letter to the poker community.

Lipscomb started by addressing some concerns over standard filming releases players must sign before they play in a World Poker Tour tournament. He also emphasized the importance of the player as a business partner to the World Poker Tour, and that the player should "keep an open mind and look for the reality" rather than "just accept misinformation."

He also did something somewhat counterintuitive: In an attempt to refute the notion that the WPT is an "evil empire" that is making "massive profits" and refuses to share that success with its players, he downplayed the success of the business. Lipscomb pointed out that WPTE has yet to turn a profit in four years of business, and that Lyle Berman -- CEO of WPTE parent Lakes Entertainment -- has yet to sell a share or profit off his investment in the WPT.

Basically, the gist of Lipscomb's message is that the company is investing in the partnership -- partly by funding its Professional Poker Tour with $2.5 million out of its own pocket, with no TV deal in place. The company has yet to receive a dime for the PPT. And thus far, every player who has ever made a final table of a WPT event has made more money off of the WPT than WPTE has.

Clearly, this was not a message meant to boost investor confidence.

That said, though some of Lipscombe's points came across a bit awkwardly, The Motley Fool has long advocated shareholder communication. Since poker players -- the lifeblood of the World Poker Tour -- clearly qualify as stakeholders, I find Lipscomb's effort here commendable.

There was one other item of note: Lipscomb said that Lakes -- which has said it may need to sell part of its 62% stake in WPTE in order to fund its own business -- has yet to sell a share. That potential share sale is part of the reason the stock has been beaten down further and further; it now sits at a new low, under $6 per share. And when a stock gets beaten down for reasons external to the business -- such as potential share sales due to the financial needs of a parent company -- it starts looking a bit more like an investment opportunity. If I were interested in the stock (and if there weren't other more attractive and lower-risk investment opportunities available), I would venture that now might even be the time to examine WPT as a possible buy.
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