Internet gaming, and online poker in particular, is one of the fastest growing fads around and PartyGaming, the world’s largest online poker business, is managing to make a tidy profit on this fad. In fact, PartyGaming is extremely profitable and a look at the company’s financial statistics proves this. PartyGaming, which recently listed on the London Stock Exchange, saw profits of $391 million in 2004 on over $600 million in revenue and, for the first quarter of 2005, saw an amazing profit of $128 million on $222 million in revenue. This makes for a net margin of 58 percent.

Thousands of players log on to online gambling sites everyday and all day. A lot of the popularity of poker can be attributed to Travel Channel’s World Poker Tour and other televised coverage of major poker events. Whatever the reason for the popularity of poker, PartyGaming is reaping the profits. The company, which went public on June 27 th of this year, did so at an initial price offering of 116 GBP (or 204 dollars) and now sits at 149 GBP (or 262 dollars). The company saw a profit of 500 million dollars on 888 million dollars in revenue which means its earnings are growing at 26 percent and its revenue is growing at 46 percent. Industry analysts say that the company is fairly priced when all the variables are considered and that the online gaming industry itself exhibits tremendous growth potential and rising popularity. As a result of such positive forecasts about the industry, many other online poker companies are intending to go public too.

Too only focus on the positive forecasts about the industry would be misleading, however, since there are some downsides as well. For one, many fear that poker’s popularity is simply a passing fad and that fads, by definition, eventually pass, which will leave the online poker industry hurting. While this is a real concern, most people think that the popularity of online gambling and online poker will not diminish and that is appeal is here to stay. A more serious concern, however, about the industry is the fact that online gambling of any kind is illegal in the United States. This presents a real problem for companies like PartyGaming which gets most of its revenue from residents of the United States. In fact, if any of the founders of PartyGaming ever set foot in the United States or on U.S. territory, they can be arrested, fined and/or imprisoned. The company’s prospectus counters this concern, though, when it notes that “PartyGaming and its directors rely on the apparent unwillingness or inability of regulators generally to bring actions against businesses with no physical presence in the country concerned." Since the founders are now worth billions of dollars each, it is highly doubtful that they will be visiting the United States anytime soon, though.