"Excessive Flotations of New Gambling Sites May Suffer From Government Pressures"

Fitting in with its own policy of an increasingly aggressive anti-online gambling policy, the United States is pursuing– a policy proposed to frustrate the industry’s ever expanding growth. This could seriously affect the future of all online gambling businesses, in particular, those businesses which are intending to float on the London Stock Exchange.

Among the more aggressive measures that the U.S. is pursuing is a crack down on advertising directed toward online gambling sites. As an example recently Esquire magazine was forced to remove ads for the online poker site, Boondog.com, and Google, ESPN, and Yahoo! have ceased receiving online gambling ads to be placed on their American sites. The government is banning credit card companies from dealing with online gambling sites. PayPal, which is owned by eBAY, and Chase have already decided to not allow transactions. This later action could prove to be particularly disadvantageous to online gambling companies in as much as many of the players of these online gambling Internet sites are residents of the United States.

Since most of its online customers live in the U.S, PartlyGaming, is one company that could definitely feel the effect of such measures. The company is about to carry out a controversial 5.5 billion pound flotation on the London Stock Market and the prospective, which is to be released before the flotation, will contain information with regard to the legal question of online gambling in the United States. It will also contain information describing the company’s four billionaire founders. Included will be information regarding the financial advisors to the floatation which is being led by Dresden Kleinworte Wassersteiner. All of the information no doubt, will be strictly scrutinized. Dresden Kleinworte and Wassersteiner could make as much as 44 million pounds if the 5.5 billion pound float price is attained. A 77 percent stake in the business will be held by former Internet pornographer Ruth Parasol, her husband Russell DeLeon and two others. Some potential investors think that PartlyGaming’s prospects for the flotation are too high and that the company should follow the approach that Empirer Online is taking. The first online poker group to float in London will be Empirer Online, which has raised 123 million pounds, plus 19 million pounds of new money. The company will have a market value of over 500 million pounds but it will be valued at 14 times this year’s earnings. This is much lower than the 24 times that PartlyGaming is planning to reach. As one City fund manager is reported as saying, don't consider the dividend yield, the stock should be priced at a modest valuation. Still, he says, it doesn’t seem to be approaching a modest valuation.