Even as its four major players are said to be targeted for a U.S. arrest at the first drop of an American gambler, PartyGaming.com's anticipated initial public offering hit the London Stock Exchange this week with an expected value of over $8.4 billion.
The PartyGaming IPO is believed to be the largest to hit the London exchange in over five years.
"We are delighted that the [IPO] has received an excellent response from major U.K. and international institutional investors," said PartyGaming chief executive Richard Segal in a statement. "The listing will reinforce the group's position as one of the world's leading online gaming companies and enhance the group's profile as we seek to expand internationally."
The company's four major players, including former adult Internet mavens Ruth Parasol and her husband James Russell DeLeon, were reported in May as facing arrest in the U.S. if PartyGaming.com and its three main brands – PartyPoker.com, StarluckCasino.com, or PartyBingo.com – were detected accepting even one American-based bet.
PartyGaming shares were up 11 percent on its first London exchange trading day, or $2.12 per share, which accounted for the $8.4-plus billion opening valuation, and the stock closed the first trading day at a reported $2.35.
The big problem for PartyGaming: the company's own prospectus admits it relies on American-based payment processing, which leaves it even more vulnerable to American-based legal action against the company.
Justice Department officials were quoted as saying in late May that PartyGaming could take all the British-based bets it wanted if online gambling is legal in Britain, but in the U.S. they'd be prosecuted under the U.S. Interstate Wire Act, Illegal Gambling Business Act, and Travel Act, facing two to five years behind bars each if convicted, according to a British news report.
Parasol, DeLeon, and India partners Anurag Dikshit and Vikrant Bhargava first said in may that they expected the IPO to be worth at least more than $2 billion. But in its first day of active trading on the London exchange, the site was being called a winner in spite of negative comments the company got leading up to the IPO.
"Expectation is growing that the IPO and the level of oversubscription for the group's shares could trigger a wave of floats from rival online gaming groups," said the Financial Times within hours of the IPO's beginning. "Leading the pack in likely contenders is online casino operator 888.com, which, like PartyGaming, is based in Gibraltar."
The paper quoted one leisure and entertainment industry analyst, Andrew Lee of Dresdner, Kleinwort, Wasserstein, as saying only the largest online gambling operators were likely to prosper similarly if they hit the open trading markets. "As with most industries, and particularly the Internet, it's the biggest that float to the top," Lee told the paper.
