New Delhi: Two Indian founders of the world's largest online casino PartyGaming have lost a fortune estimated at over $1 billion in a matter of days, after the company's shares plunged in response to a US Government crackdown on Internet gambling.
Efforts to bring online gambling to India too have suffered a major setback after the US Congress passed a bill on September 30 against Internet gambling.
The bill is awaiting President George W Bush's assent, which is expected in the next couple of weeks.
The bill makes it illegal to accept bets on Internet or for credit card firms to make payments to gambling websites.
Anurag Dikshit, a software engineer from IIT Delhi who co-founded and remains the biggest shareholder of Gibraltar-based PartyGaming with a 29 per cent stake, held shares worth 1.24 billion dollars before the bill was passed by the Congress.
However, his net worth based on his stake in PartyGaming has dropped to about $450 million with a plunge of over 63 per cent in the company's share price since September 30.
He had founded PartyGaming, which controls about 50 per cent of the online poker market, with another Indian Vikrant Bhargava, adult entertainment business entrepreneur Ruth Parasol and her husband Russel DeLeon in 1997.
Bhargava's stake has tumbled by over $200 million to about 140 million dollars, while the four founders have witnessed a loss of about two billion dollars collectively.
Dikshit was named as the world's 207th richest person in 2006 by the Forbes magazine with his huge fortune made largely from the listing of PartyGaming in London in June 2005.
He was also ranked as the tenth richest global Indian in 2005 by Forbes with a net worth of $3.3 billion.
Ruth Parasol and Russel DeLeon hold 14.9 per cent each in the company, while Bhargava holds a seven per cent stake. The husband-wife duo were tied at 197th rank on the Forbes list of 400 richest Americans this year with an estimated net worth of $1.8 billion each.
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PartyGaming's share price has dropped to below 40 pence from 107 pence on September 29, before the crackdown on the online gambling by the US Congress.
The stock has lost nearly three-fourth of its value from the all time high of 158 pence.
Meanwhile, PartyGaming is likely to lose its place on the elite FTSE 100 index of London Stock Exchange after a sharp fall in its market value to about 3.2 billion dollars, from an estimated $9 billion at the time of its IPO.
Rival 888 would also be dropped from the FTSE 250 index to make room for PartyGaming.
US accounts for more than half of the $12 billion Internet gambling market, while London-listed PartyGaming gets more than four-fifth of its revenue from the US.
Party Poker is the world's largest online gambling site in terms of revenue and number of players with its poker network boasting of over 1.2 million active players. However, after the US crackdown, most of the players have expressed their intention to quit the American market and plan to expand their presence in the Asian and European countries.
However, a ban in the US and existing domestic opposition to these businesses in India are likely to keep them away from the country, market experts feel.
PartyGaming had said in its IPO prospectus in 2005 that the US Justice Department "considers that companies offering online gaming to US residents are in violation of existing federal laws" and that investors may lose their money if the company is banned from the US.
A sharp plunge has been witnessed in the market values of other online gambling firms such as Sportingbet Plc, 888 Holdings Plc, World Gaming and Empire Online as well.
There were 23 online gaming-related stocks on London's Alternative Investment Market at the end of August.
Dikshit had stepped down from PartyGaming's board early this year, but continues to head the company's research and special projects.
Vikrant Bhargava, also one of the early members of the company and previously the group's marketing director, also stepped down from the board this May and has announced he would quit the company by 2006-end.
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