ITH Poker Forum

[Maverick_the_Donkey]

I've compiled some info on the history of Party Poker's value and mitigating factors in the industry and written this article with Matthew's help. Most of it you already know the timeline, and this article asks "is Party Poker likely enough to enter the US to purchase Party Gaming Stock"?

With Full Tilt Poker’s reputation being tarnished by not being able to pay US players and having their operating license suspended, is now a good time to bet on Party Poker stock?

Summer 2005, Las Vegas NV - Las Vegas was buzzing with the sound of chips being shuffled at the World Series of Poker. The event had become a destination for poker players from around the world, many of their trips paid for by Internet Poker sites. The most popular of those sites, Party Poker, was impossible to miss having rented an ad on seemingly all of the taxis in Vegas. For those not in Vegas, Party Poker sponsored poker on TV, events such as the World Poker Tour, and of course, The World Series of Poker.
Party Poker was poker.

Party Poker went public that year as part of Party Gaming, valued at £4.64 billion and one of the London Stock Exchange's 100 biggest companies.

Fall 2006, The United States Congress hastily added the Unlawful Internet Gambling Enforcement Act (or UIGEA) to the unrelated Port Security Act at the last hour. This Act made it illegal to accept bets over the internet. Party Poker decided to pull out of the United States, by far their largest and most lucrative market in the world. Some internet poker sites continued to serve U.S. players and took Party Poker's place at the top. PokerStars became the top dog with Full Tilt Poker close behind.
The day after the UGIA was passed, Party Gaming stock fell 60% and their market cap fell close to 65% from 2005.

2007, Stock began to rebound. A World Trade Organization ruling found the U.S.'s UIGEA law in violation of international trade law. No change was made in U.S. policy. Instead, the World Trade organization negotiated a compensation package. Party Gaming stock fell 50% by the end of the year.
Absolute Poker and Ultimate Bet, both major internet poker rooms serving the U.S. market, were caught cheating their players. Their reputations have not recovered.

2008, Party Gaming stock fell to its lowest point, £714 million, down from £4.64 billion 3 years earlier. Shares were down under £100.

2009, Party Poker purchased the World Poker Tour and entered into a Non-Prosecution Agreement with U.S. authorities. Party Gaming Stock rose over the year.

2010 - Party Gaming and Bwin announced a merger to create the largest listed egaming company, to be completed the first quarter of 2011. Party Gaming shares rose 30% to £333, the highest value to date since 2007.
Bwin initiated talks with U.S. Casino partners Caesars Entertainment to help it re-enter the U.S. market. PokerStars and Full Tilt Poker did the same.

2011,
3/25/11, PokerStars, now by far the largest and most profitable internet poker room in the world announces partnership with Wynn Resorts. Wynn states their intention to push for regulation of internet poker in the U.S. and launch PokerStarsWynn.com, a 50/50 venture between the partners.

3/31/11, Full Tilt Poker, the second largest internet poker room, announces partnership with Station Casino owners for the same purpose.

4/15/11, "Black Friday": PokerStars, Full Tilt Poker, and Absolute Poker have their domains seized by the FBI and charged with serious crimes including money laundering and bank fraud. The largest U.S. internet poker rooms can no longer serve U.S. customers. Agreements are reached to allow the sites to pay deposits back to players.

5/31/11, The WSOP begins and finds that speculation of low player turnout is unfounded. Demand is still high. Full Tilt Poker's poster boy, professional player Phil Ivey, boycotts the WSOP and publically states that Full Tilt Poker cannot meet its financial obligation to its players. Full Tilt players begin to try and withdraw their money worldwide.

6/24/11, Rep. Joe Barton’s (R-Texas) creates a bill to give the states the right to offer internet poker by opting out of UIGEA legislation. Operator licenses may be obtained by established U.S. brick -and-mortar card rooms, casinos, and race tracks with the option to expand the operator pool after two years.

6/29/11, Full Tilt Poker has its gambling license suspended, resulting in a play stoppage. Party Poker expects to benefit significantly.

6/30/11, Bwin confirms sale of their Ongame poker network is in process and seeks approval to buy back £75 million in shares and pay a dividend of £30 million. Bwin will transfer its poker players to Party Poker's network. A similar network recently sold for £70 million.
“This policy reflects the strong cash-flow characteristics and long-term earnings potential of the group whilst retaining sufficient resources to fund ongoing operating requirements and continued investment for long-term growth,” said Bwin/Party Gaming regarding their buyback.

7/1/11, Investors buy Full Tilt Poker.

Everybody likes a comeback and Party Poker seems to be best positioned to provide a poker gaming platform if the U.S. allows internet poker and if they partner with an established U.S. gaming operation. They played by all the rules, have the resources and experience to implement a new regulated environment, a very popular platform, and are publically traded.

Are the odds with Party Poker enough to make their stock a gamble worth taking?

Thoughts...? Corrections? Additions?
Any Party Gaming shareholders or potential shareholders? Thanks for reading!

[kinnipak]

Excellent summary of events. Well done and thank you Mav.

My problem lies with the US Govt powers that be. ( )

How long will it take these present day laureates and noble ladies and gentlemen to realize that Party or Stars would be the best and easiest way to allow poker again in the USA? Both have the framework in place, both have the experience, and both have complied fully with all US Govt requests and policys. Is 6months too long? A Year?

Seems like a no brainer to me to get the monies rolling in as quickly as possible. But, This is Washington we are talking about....

[Maverick_the_Donkey]

I think Poker has been the punching bag. The NFL lobby is making sure that sports betting is left alone for the most part, and Horse Racing..well that always was a game of skill, (betting on which horse would win, not the actual racing)

With the online poker landscape clearcut, it would be most sensible to use a tried and true system rather than trying to develop one. Can you imagine how much waste there would be if the Government tried to create and run a system like Stars or Party? They would make Full Tilt look like financial advisers!

It always seemed to me that legalization was ABOUT to happen, so any hunch I have, I try and consider the opposite to see what could happen.

[wade]

Any Party Gaming shareholders or potential shareholders? Thanks for reading!

I've been watching Party stock for a while now. Personally, I discount any chance of them getting US cashflow back for a while...1-2 years maybe. Even if you cut the US market entirely out of the mix - they look pretty attactive to me after the FTP debacle. A fairly stable public company, with no legal muck, and a boatload of new FTP alumni $ to court. I am considering buying.

On the flip-side, I've considered what I'd do if Stars went public. I think I'd have to snub any IPO there...too much potential for legal muck.

[Maverick_the_Donkey]

It's wild to think that Party was one of the "Fortune 100" of the London Stock Exchange, have lost so much equity and are still very viable.

[nsidestrate]

I'm pretty bullish on Party Gaming. They are huge players in the online casino business which is very lucrative and their balance sheet is swimming in cash. I think their returns look good based on the Tilt debacle and there is at least a small prospect of a home run if the US market shows signs of reopening.

[Maverick_the_Donkey]

I'm pretty bullish on Party Gaming. They are huge players in the online casino business which is very lucrative and their balance sheet is swimming in cash. I think their returns look good based on the Tilt debacle and there is at least a small prospect of a home run if the US market shows signs of reopening.

That small prospect and the subsequent high payout vs the potential amount lost is a tempting gamble. It's interesting because you can't exactly buy stock from any other major poker rooms that I know of.

[Tosin]

I think Party poker stocks are not profitable since full tilt poker has been bought by poker stars and IMO poker stars will still climb higher. So it's a good place to invest some money.