Party Gaming

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Party Gaming Stock Analysis

Party Gaming is one of the most dominating online gaming giants within the very competitive online gambling industry. Party Gaming operates the second largest online poker company in the world, Party Poker, and has used its success there to launch other lucrative online gambling businesses like Party Casino, Party Bingo, PartyBets, Gamebookers, and Party Gammon. The online casino business allows players to wager on many different table games, and in conjunction with accepting bets for sports, Bingo, poker and backgammon, Party Gaming has diversified itself throughout the gaming market. To reach more customers, Party Gaming offers their services in 12 different languages.

Though Party Gaming lost a considerable amount of revenue when they closed their real money games to the US market, they wisely kept a presence in the US through their sister site PartyPoker.net that allows players to play for free.

The early years of PartyGaming were plagued by a few things. The previous company's name, iGlobalMedia, suffered from a poor reputation because they were caught using casino table game software that was not random. Furthermore, negative publicity from the media surrounded the company's co-founder Ruth Parasol because of her earlier involvement with adult businesses. The later very successful Party Poker Million cruise was also involved is some early controversy, as the first tournament in 2002 guaranteed a million dollar prize pool and with less then the number of players buy-ins needed to cover the guarantee, Party Poker lost several hundred thousand dollars. This loss was a blessing in disguise, as the positive publicity they received for making good on their promise gave them a lot of exposure.

Exposure to the Party Poker brand was increased dramatically during the first season of the World Poker Tour when the spokesman for Party Poker Mike Sexton hosted the shows. Party Poker was the only online poker room to advertise during the first few months of the highly rated first season, attracting thousands of new players to their site. Their market share skyrocketed and they became the world's largest poker room. Since then, they have fallen to second after being forced to pull out of the US market. When the UIGEA was passed in the US, the stock price fell by 60% within the first 24 hours. During the IPO of Party Gaming on the London Stock Exchange in the summer of 2005, market cap was just under 9 million dollars, and putting it amongst the 100 biggest companies on the London Stock Exchange. However, after leaving the US market, the market cap of Party Gaming fell to about 3 billion dollars. Profits fell from more then 1 million a day to less then half a million a day. On the bright side, Party Gaming headquarters are in the gambling friendly Gibraltar, where it is subject to a 1% gaming tax.

The future for Party Gaming is still very positive, as their name brand recognition is still strong and their diversified gaming income has helped them increase their revenue. Party Gaming is also uniquely positioned amongst other publicly traded online gaming sites to capitalize on reentering the US market when it is allowed to because of their ongoing presence allowing US players to play free at PartyPoker.net.

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