In today‚Äôs Sunday Business section of The Old Grey Lady, journalist Kurt Eichenwald writes about the sensational porn-to-poker tale behind PartyGaming PLC, the Gibraltar-based company that operates online poker behemoth PartyPoker.com. This week PartyGaming will go public on the London Stock Exchange in what analysts anticipate to be the largest offering in years and, as Eichenwald explains, Americans can‚Äôt get in on the action . . . well, at least not legally. While 90% of PartyGaming‚Äôs profits in 2004 came from stateside gamblers, no shares will be offered in the U.S., and the company‚Äôs officers and directors, including the female founder who‚Äôs originally from San Francisco, could risk being served with an arrest warrant if they ever set foot on U.S. soil.
The article gives great background on the legal clash of words between PartyGaming and the justice department as well as an overview of political plays being made both in the U.S. and abroad, but the fascinating read here is how PartyGaming came to be. While I won‚Äôt attempt to retell the story, as Eichenwald does an excellent job in doing so, basically it begins with a massage parlor owner in San Francisco who‚Äôs daughter grows up to be a lawyer-turned-phone-sex princess (on the business side with her dad not the “breathing heavy into the phone while doing the laundry” side).
Printing their own money thanks to an endless stream of hard-up pervs, the father-daughter duo–Richard and Ruth Parasol–eventually got in on the online porn action and invested in Seth Warshavsky‚Äôs Internet Entertainment Group (didn‚Äôt they own the Tommy Lee and Pamela Anderson video?). When Warshavsky fled the U.S. leaving behind a huge debt in his wake and on Ms. Parasol‚Äôs lap, she decided to get out of the seedy porn business and do something respectable: start an online gambling site called Starluck Casino.
And as they say, the rest is history.
Well actually, the rest is the future, as analysts predict the online poker market will grow to $6 billion in 2009, from last year‚Äôs measly $1 billion, and no one seems to be seriously rivaling PartyGaming‚Äôs current stronghold on the market (thanks to U.S. laws that make it impossible for American-based casinos and companies to join the online game).
Indeed, what the New York Times article makes painfully clear (besides of course that there’s a lot of money in porn and poker) is that the justice department’s flawed application of U.S. law to online poker is absurd considering the realities of the industry both here and internationally (more on this in another post).
Kudos to the New York Times for giving some serious ink to this story (about a full page and a half), and on the same day, printing an excellent piece on Stuey Ungar that coincides with the release of the biography, ‚ÄúOne of a Kind: The Rise and Fall of Stuey ‚ÄòThe Kid‚Äô Ungar, the World‚Äôs Greatest Poker Player,‚Äù by Nolan Dalla and Peter Alson. The book comes out this week, and it’s sure to be one of the best bio works we’ve seen considering Nolan Dalla’s firsthand accounts with Ungar and he’s a first-rate storyteller. You can get it online at Amazon.com for only $16.50.