PartyGaming Surges On Top 5-Year UK Float

Party Poker, Starluck Casino and PartyBingo - and now has more than half the global online poker market.

Poker has become a big money-spinner for Internet gambling companies, which estimate the world Internet gambling market between $7 billion and $12 billion per year and with 20 percent annual growth.

The Gibraltar-licensed group has endured a bumpy ride to flotation, dogged by fears that it could lose its main market as the United States seeks to crack down on Internet gambling.

PartyGaming's prospectus warned its directors risk jail if they travel to the United States, but industry analysts said the threat of legal action from the Justice Department was minimal.

"We had a marketing director there a couple of weeks ago, and it is not going to restrict my travel to the U.S.," said Segal.

Analyst Greg Feehely at Altium Securities said there was minimal risk that online gambling would be banned.

"We've seen some anti-measure introduced every year for the past six years, not one of which has been a success," he said.

But Henk Potts, investment manager at Barclays Stockbrokers, called the risk "considerable."

"There will always be this black cloud hanging over them when more than 80 percent of their customers are potentially breaking the law by using their services," he added.

Analysts said that PartyGaming was trading at around 13 times earnings, a significant discount to rival Sportingbet, which trades on a 2006 PE ratio of 19.5, reflecting some of the risks it faces.

Founder Dikshit is set to gain around $720 million from the flotation, while co-founder Vikrant Bhargava, 32, PartyGaming's marketing director is set to earn around $200 million.

Two other major shareholders, former porn entrepreneur Ruth Parasol and her husband Russ de Leon, will net around $370 million each.

The offer consists of 781.6 million existing PartyGaming ordinary shares, prior to the exercise of an over-allotment option of up to 115.3 million shares.