PartyGaming, the Internet gambling company that owns and operates PartyPoker.com, has successfully floated on the London Stock Exchange and has already seen its value rise to about five billion pounds. When PartyGaming officially went public, it launched its shares for 116 pence per share and, by the end of the day, had seen them rise to 129 pence per share.

The successful flotation and valuation makes PartyGaming worth more than two of Britain’s largest businesses, British Airways and the retailer, Boots. It also virtually guarantees PartyGaming’s admission to the FTSE 100 index in the autumn. Not surprisingly, Richard Segal, PartyGaming’s chief executive officer, was elated by the reception of the company’s flotation by the United Kingdom and international institutions. “The listing will reinforce the group’s position as one of the world’s leading online gaming companies and enhance the group’s profile as we seek to expand internationally”, commented Segal.

As part of its expansion effort, PartyGaming is now concentrating on developing its other gaming brands such as Starluck Casino and PartyBingo. Because of the phenomenal growth in the online poker industry, PartyGaming had focused most of its efforts on developing PartyPoker and had largely ignored the development of its Starluck Casino and PartyBingo sites. PartyCasino will be launched sometime in the beginning of next year and will be using common software and cashier systems that will enable punters to play all of its games on one platform.

The starting flotation price, 116 pence per share, fell within the 111 to 127 pence range indicated by the Gibraltar-based company just prior to its actual flotation, but was more conservative than many in London had been anticipating.

To the disappointment of many potential investors, the initial offering was made available only to large institutional investors. Full trading was made available a few days later. Not all fund managers are eager to recommend purchasing shares in PartyGaming, however, and Barclays and Clay is one such fund manager. Barclays and Clay has been warning its clients that there are “too many unanswered questions” related to the future prospects of PartyGaming for it to confidently recommend the stock. Most of the concerns center on the legality question of online poker in the United States where PartyGaming generates 90 percent of its revenues. The possibility that legislation prohibiting online gambling could be introduced is stoking fears regarding PartyGaming’s ability to continue generating its revenues.

There are other fears as well such as the intensifying competition within the online gambling industry and the possibility that the popularity of online poker is just a passing fad.