Investors following the online betting industry saw first hand the extreme profits made by those that backed PartyGaming’s June flotation on the London Stock Exchange. In contrast to what analysts were predicting about PartyGaming’s flotation, backers of PartyGaming’s flotation did quite well. They did far better, in fact, than anyone actually playing at PartyGaming’s online gambling site.

Notably, most analysts had serious doubts about the wisdom of investing in PartyGaming because of the great number of uncertainties associated with the Internet gambling industry. In addition, many analysts still hold doubts about whether it is wise to invest in PartyGaming or any other online gambling business that is planning to go public because of these uncertainties. The biggest problem, of course, lies with U.S. policy regarding online gambling. The United States has declared online gambling to be illegal and has applied pressure on companies that have advertised for online gambling to cease their advertisements. The U.S. Government has also pressured online payment companies (such as PayPal and Citigroup) to stop processing payments for online gambling companies. Another possible development that could prove problematic to existing online gambling companies is a U.S. decision to regulate the industry. A regulated industry would encourage rivals such as the big Las Vegas operators, who have so far stayed out of the industry, to come in.

On the other hand, there are those who are more optimistic about PartyGaming’s continued success and the success of existing online gambling companies that are preparing to go public. Cassava Enterprises, owner of 888.com, Casino on the Net, and Pacific Poker, for example is hoping for a similar success story when it goes public. While the prospectus for Cassava Enterprises will not be issued until next month, indicators point to a considerable discount to PartyGaming. The discount is largely a result of Cassava’s much smaller size and slower growing casino operations, but all other financial indicators create a positive outlook on Cassava’s planned flotation. No doubt Cassava and other online gambling businesses are betting on the status quo when it comes to U.S. policy and their lack of action when it comes to enforcing that policy. In spite of U.S. efforts to prevent advertisements for online gambling sites and prohibit payment companies from processing payments for online gambling companies, there have been no efforts to place an outright ban on the Internet gambling companies and that doesn’t look like it’s about to change any time soon. Thus, the size of the profits made from PartyGaming’s flotation will likely tempt other investors into backing Cassava’s flotation. Keep in mind though, that while the profits have been phenomenal, if you are looking for long-term investments, the online gambling industry is not the place to watching.