Online gaming group PartyGaming has lost its coveted place in the FTSE 100 index following the collapse of its shares during a horrific fortnight for the Internet gambling industry, which has seen company after company pulling out of the US market.
PartyGaming drops down into the FTSE 250 index having only joined the elite band of Britain’s 100 biggest companies just over a year ago, during the online gaming industry’s surge in popularity which saw shares in the company soar to new levels.
However, the recent tightening of restrictions which was kick-started by a number of summer arrests and has now culminated in the passing of the Internet gambling law by US Congress, has devastated the share values of most online gaming companies. Last week saw £4 billion wiped from the stock market value, with PartyGaming alone losing more than £2 billion.
PartyGaming’s co-founder and major shareholder Anurag Dikshit, a software engineer from IIT Delhi, is reported to have lost almost $800 million due to the dramatic drop in share price. His 29 percent stake in the company had been worth $1.24 billion, which has since plummeted to around $450 million.
PartyGaming’s relegation from the FTSE 100 index also forces 888 out of the FTSE 250 index.
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In press releases separately put out by both companies today, bwin and PartyGaming have released details of their merger plans.
In the press release from bwin, Norbert Teufelberger, Co-CEO of bwin explains, “The online gaming industry is going through a phase of consolidation, making market players’ size and geographic diversification more crucial than ever.”
The new company will operate worldwide with its existing brands under the name of bwin.