Forget
mortgages for illegal aliens, we're talking big money here -
Investing in Online Gambling:
Online poker rooms exploded onto the scene around the same time that poker became the red-hot hobby of people around the world. And now that the profit potential of the Internet has been established, more real businesses are popping up in this arena. One such company trying to combine the popularity of both the Internet and gambling is Party Gaming, listed on the London exchange.
...
The company went public on June 27, at an initial price of 116 GBP ($204), giving it a market cap of $8.5 billion. Today it sits at 149 GBP, or $262. Is the business worth that much? At the current run rate of $500 million in profit on $888 million in revenue, you're looking at a company with earnings growing at about 26% and revenue growth of 46%. Slap a 26 P/E on that half-billion in profits and that's a $10 billion market cap. I'd say you're looking at a fairly priced company -- in an industry that's showing tremendous growth and popularity. More online poker sites are lining up for their IPOs.
There are two possible downsides here. One is that poker will turn out to be a fad. I'm becoming less convinced of that. If it does, we'll see it when entries into the major tournaments flatten out or decline.
And number 2?
The other concern is that it's illegal for online casinos to take bets from U.S. customers. In theory, if the company's founders set foot on U.S. soil, they can be arrested, fined, and/or imprisoned. However, its prospectus notes, "PartyGaming and its directors rely on the apparent unwillingness or inability of regulators generally to bring actions against businesses with no physical presence in the country concerned." Given that the company's directors are now worth billions each and the company is based in Gibraltar, I don't expect them to be returning to the U.S. anytime soon.
No fertilizer, Sherlock! Some
details on the founders:
So how did such a company come about? Well, back in 1998 a Californian porn princess called Ruth Parasol (and yes, that really is her name) commissioned a 25 year old Indian computer boffin to write a piece of software. Ms. Parasol had recently sold her porn interests, founded, according to legend, on a couple of sex phone lines given to her by her father as a birthday present when still in her teens (you couldn’t make it up could you?).
She wanted to invest the proceeds, found that online gambling was the next big thing allegedly, and, via a friend, was introduced to a recent graduate of the Indian Institute of Technology, young Mr Dikshit. He was ready, willing, and, most important of all, able, to create a computer programme for casino games such as roulette and poker. He then brought on board his chum from college, Vikrant Bhargava as marketing director, and the rest, as they say, is history, with the company’s PartyPoker website now enabling some 70,000 people to play the game at the same time.
The whole helter skelter ride so far has left the newly rich founders more than a little breathless.
You deserve some reward for having to put up with a name like Dikshit, but this seems a little extravagant. As for Ms. Parasol - words fail me.
