History of Party Poker Part of Partygaming
History of Party Poker and Partygaming
Party Poker is synonymous with one of the biggest online poker rooms in the world. The group is incorporated into the larger Gibraltar based Party Gaming operation which includes casino gaming, bingo and other forms of gambling entertainment on the internet. Party Poker fell from dizzying heights following stringent gambling regulations passed in the United States in 2006 but has managed to pull itself up once again to compete in the global market.
Beginnings of Party Gaming
The original founder of Party Gaming was Ruth Parasol, who developed a successful network of online gambling sites under the iGlobalMedia group in 1997, which later evolved into Party Gaming. The primary shareholders of the group were Parasol, her husband Russ deLeon, the operations director, Anurag Dikshit and the marketing director of the venture, Vikrant Bhargava.
Beginnings of Party Poker
Party Poker was launched in 2001 by Party Gaming after the company recognized the huge potential there was to be had in this growing sector of online gaming.
Initially, Party Gaming signed a number of marketing partnerships that allowed online companies to share its pool of poker players. Players essentially accessed the poker network through the software provided on PartyPoker.com or through one of several skin partners such as Empire Poker (owned by Empire Online).
The market was more than ready for this poker site that offered a fast, intuitive interface and an excellent selection of games. In addition, Party Poker’s affiliate program was hugely popular with webmaster who promoted the site for a generous share of the profits.
Move Away from Skins
Through intense marketing and advertising campaigns, Party Poker became one of the biggest online poker sites in the world. The site used events such as the World Poker Tour and the World Series of Poker to carry its messages, and conversations about the online poker room on poker forums such as Two Plus Two inevitably involved a comment or query about Party Poker.
By 2005, Party Poker realized that it did not need its skins to operate in the industry and could rely on its own successful product. The group made concerted efforts to pull away from these skin groups such as Empire Poker and entered into a series of talks to buy out these companies or merge with them.
The five main skins were Empire Poker, Intertops, Coral Eurobet Poker, PokerNOW and MultiPoker.
Through these talks, Party Gaming purchased a number of skins such as IntertopsPoker and MultiPoker.
In October 2005, Party Gaming launched a new, upgraded Party Poker system that left the customer bases belonging to skin partners out in the cold. The group continued to hold offer discussions with Empire Online, an investment group owned by Arnon Katz and Noam Lanir, and trading on the London Stock Exchange.
After negotiations failed between the two parties, Empire Online declared that it would be taking Party Gaming to court for cutting its customers off from the original network. However, in 2006, it was declared that Party Gaming and Empire Online had reached an agreement, whereby the former would purchase all Empire Online’s skin operations for $250 million. By the end of the year, Party Gaming had acquired all of Empire Online’s assets.
In June of 2005, the four owners of Party Gaming decided to take Party Gaming public by floating it on the London Stock Exchange. The four sold 23% of their shares in the company to finance the venture and within a month, the company’s value rose from the initial £4.64 billion to over £12 billion.
In May of 2006, both Dikshit and Bhargava stepped down from Party Gaming’s board and, later that year, an integrated platform was launched, enabling poker players to play other games on one network, using one seamless online gaming account.
It was around this time that Party Poker began running ads on US television. While this propelled Party Poker to the peak of the mountain, with fame comes attention. At this time, the US was quietly looking to put an end to online gaming, and these poker tv ads were salt in open wounds that may have helped increase the motivation to get gambling banned in the US. Shortly thereafter, it did.
Party Poker and the US Legislation
The most dramatic change in Party Poker’s history came with the introduction of the Unlawful Internet Gambling Enforcement Act in the United States in October 2006. At the time, Party Gaming claimed a 41% share of worldwide online poker revenue and 77% of its revenues came from US customers alone. Unfortunately, as a public company, Party Gaming was answerable to its shareholders and had no choice but to stop serving US players.
In a press release on October 2nd, 2006, Party Poker said: “The Company will suspend all real money gaming business with U.S. residents, and such suspension will continue indefinitely, subject to clarification of the interpretation and enforcement of US law and the impact on financial institutions of this and other related legislation.”
Party Poker thus had to abandon its extremely lucrative US market – a market which it dominated until that date. Up until then, Party Poker was considered the strongest and largest online poker site to serve the US poker industry, boasting the most number of players and the most in ring game revenue than any other poker room around at the time. Following the pull out, share prices in the company tumbled to almost 60% and the company scrambled to establish itself in other markets such as Europe and Asia.
While Party Gaming held a place on the FTSE100 index prior to the Unlawful Internet Gambling Enforcement Act, it was dropped to the FTSE250 after its share prices plummeted so dramatically.
Player volume also dropped dramatically and Party Poker began the long and arduous road of climbing out of its lowest point in history to reach a plateau once more. Not only did Party Poker manage to stay afloat during those critical years, but it also managed to establish itself in a number of markets around the world in an extremely positive way.
It can safely be said that Party Poker has weathered the first blow of the UIGEA storm and its player volume has stabilized to a point where numbers are considered quite satisfactory.
Settlement with the United States
In December of 2008, Anurag Dikshit, acting independently of Party Poker, signed a guilty deal with the US Department of Justice for violating the US Federal Wire Act prior to the introduction of the Unlawful Internet Gambling Enforcement Act. Taking full responsibility for his actions, Dikshit agreed to forfeit $300 million in exchange for the DOJ dropping all charges against him.
In April 2009, Party Gaming signed a non prosecution deal with the Department of Justice, where the group admitted that it had targeted US citizens prior to the UIGEA – an act that went against US gambling laws. Party Gaming agreed to pay the sum of $105 million over a period of four years.
The deal with the Department of Justice means that Party Poker (and Party Gaming as a whole) has no outstanding legal issues with the Americans. As such, if and when regulation takes place in the US market, Party Poker may be ready to step right back into the US poker industry.
Party Gaming Purchases World Poker Tour
In November 2009, Party Gaming (and thus Party Poker), through its subsidiary group Peerless Media, purchased World Poker Tour Enterprises for $12.3 million. This was despite an offer that was put in for WPTE by Mandalay Media for much more.
At the time, the board of directors at WPTE said it had “reviewed the Mandalay Proposal and concluded that it was not a Superior Proposal (as defined in the Agreement).”
Party Gaming paid the initial $12.3 million at the signing of the deal, and will pay off a minimum of $3 million in revenue sharing for the next three years.
The World Poker Tour is essentially a collection of tournaments that are held in a series of games and attended by some of the best players in the world. Players get together to complete in Texas Hold ‘em games in the United States and around the world, with many of the games being televised.
Party Poker’s main intention for the purchase of the World Poker Tour is to re-enter the US poker market and the deal, according to the Chief Executive Officer of Party Gaming, Jim Ryan is a combination of “two of the biggest brands in online and offline poker.”
Party Poker and Tournaments
Recognizing the enormous potential there was to be had in tapping into the world of land based tournaments, Party Poker joined up with the World Poker Tour in 2002 to sponsor a major live event in 2002. This was the year that the first Party Poker Millions tournament was launched, with the lucky champion guaranteed $1 million in prize money. There were many ‘firsts’ in this tournament – it was the first time that such a large sum was offered in a tournament that involved online buy ins and satellites combined with live poker tournament, and it was also the first time that a female player – namely Kathy Liebert – won over $1 million in a poker tournament.
Over the years, the stakes in the Party Poker Millions tour have increased much higher and the event is one that is much enjoyed by online poker players from around the world.
Recent Party Poker Records
While Party Gaming broke many industry records in the years leading up to the UIGEA due to its strong dominance of the US market, it has also managed to boast its comeback through several others in post-UIGEA years.
In August 2008, the world record for an online Bad Beat jackpot was broken at Party Poker, with one lucky table hitting the sum of $1,013,381.63. At the time, a spokesman for the group said: “Online poker history has been made by setting a new world record for a bad beat jackpot. To hit seven figures is quite something!” In 2009 Party Poker was topped again by a US accepted network and the Merge Network topped that Bad Beat Jackpot at $1.2 million.
In 2009, Party Poker was awarded the title of Poker Operator of the Year at the Gaming Awards, after it was found that while the site was not the biggest out there, it was certainly the one of the highest quality. Accepting the award, the poker director at Party Gaming, Moshe Davidovich said: “We work hard to try and stay ahead of the game, and it’s great to be noticed for that.”
Party Poker and Mike Sexton
Party Poker has enjoyed a long and illustrious partnership with the ‘Ambassador of Poker’, Mike Sexton. In April 2009, Sexton and Party Poker announced a renewal of their association which had been ongoing for over a decade and the pro will serve as host, consultant and player for the poker site.
“PartyPoker.com has always had a place in my heart and is special to me,” said Sexton upon the renewal of the contract. “I am delighted to pen a new deal, it means so much to me.”
Sexton acts as the main host of the World Poker Tour and spokesman for Party Poker. In 2009, he was given the honor of being made a member of the Poker Hall of Fame.
A Look into the Future
Party Poker is at the forefront of all new poker markets that open up around the world, including the newly regulated Italian industry. The company launched an Italian poker room, PartyPoker.it for cash tournaments and hopes to offer ring games in Italy in the near future.
The site is also placing a strong emphasis on marketing and sponsoring poker pros such as the Englishman Ian Frazer, the Frenchman Remy Biechel and the Brazilian Felipe Ramos.
By purchasing the World Poker Tour, Party Poker is as close as it is legally able to get to the United States market, without actually offering real money games. They also continue to collect millions of US players emails who signup for the play money tables. These emails are as good as gold if the US market opens back up.
Moving Away from Poker Poker towards Party Casino
In early months of 2010 Partygaming said they would move away from focusing their core on poker and more intensely into casino games (Party Casino). According to CEO at this time, Jim Ryan, poker has become to difficult to profit from while competing against sites which accept US players. Instead they will focus on “pure casino” players. They consider someone a pure casino player who not is crossed over from the poker platform, which many gambling sites do to increase revenues. It is said a pure casino player will play twice as long than a poker player and is worth much more.
Party Poker has proven that despite the online gambling ban in the United States it has managed to pull all the stops to remain afloat, conquer new markets and put itself in a position to enter the US market once more when regulations change.