Party Poker Blog

I'm still around, have no fear. I just haven't had much time in front of the computer this week. My 11 year old nephew is a fishing freak so I've been teaching him the finer points of catfishing in the Ohio River, sans the heavy boozing. He's been applying pressure on me to buy a boat, of all things. From a purely 'might as well do what I want' perspective, his idea has merit. And hell, my wife enjoys fishing so she's backing his play.

Since it's friday, I'm forgoing golf and fishing and heading to the boat. All these difficult decisions of what to do each day makes my head swim.

I'm overdue for an uber, I realize. Hopefully I'll catch up on my reading this weekend and rub one out in a few days.

For now, here's an interesting article about the CEO of Empire Poker and some thoughts on the split between them and Party Poker.


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Noam Lanir: A gambling man - but he refuses to take risks

Confident and colourful cowboy of the online poker world admits to feelings of insecurity


On the eve of taking his online gaming company public last year, Noam Lanir received the worst phone call of his life - a threat to kill him and his four children unless he handed over some of his substantial fortune. During the next few months, the founder of Empire Online had to record his phone calls in a covert police operation in his native Israel.

It was a horrible time which has resulted in three men facing trial. Yet there is speculation in Israel that this awful situation could have helped Lanir's business. It suggests that these recorded telephone calls could help explain one of the biggest mysteries over Lanir's Aim-listed company - how it managed to win a nasty legal fight with its far larger rival, PartyGaming. In February, the FTSE 100 company paid $250m (£135m) to settle a contract dispute which most analysts believed would drag on for years and fatally harm the smaller company.

Did the recordings help win the case? Neither Empire nor PartyGaming will comment on the settlement, which is governed by a confidentiality agreement. But the extraordinary story is entirely in keeping with the online gaming industry and Noam Lanir's place in it, because if the largely unregulated world of online gambling is the Wild West, then the son of an Israeli war hero who brought roller-blading to Tel Aviv is one of its most colourful cowboys.

City types call him wild, maverick and larger than life. When I spent a day with him in Israel, he was by turns interesting, thoughtful and outrageous.


Ask him why his London-listed company is registered in the British Virgin Islands and holds board meetings in Geneva and he admits "so we don't have to pay so much tax". It may be true of many companies but it's the first time I've heard a chief executive be so honest.

Dressed in jeans and wraparound Armani sunglasses on his 76ft yacht in Herzliya, the former nightclub owner is so physically restless that he admits to suffering from "terrible attention deficit disorder". When I finally force him to sit and talk, our four-hour interview is interrupted nine times by phone calls and unscheduled friends or by Lanir, with an ever-present twinkle in his eye, telling me to turn the tape off so he can tell me some piece of gossip.

In fluent English which only occasionally slips up under the sheer volume of information he is imparting, he admits to occasionally feeling low and exhausted. One such low point came during the protracted battle with PartyGaming, which had rescinded a highly lucrative agreement with Empire last October, a few months after both companies came to market. Empire had grown fat by finding players through a variety of marketing methods. Its 9 million players thought they were playing Empire Poker but were being sent on to other platforms, largely PartyGaming. Unhappy with the amount they were paying this so-called "skin" operation - estimated to be up to 90% of the "rake", or commission - PartyGaming decided to strike out on its own.

Empire's shares, which had been as high as 280p after floating at 175p, fell by a third to 121p. Its revenues dropped 6% in three months after selling its EmpirePoker business as part of the deal. Lanir admits that the original agreement with PartyGaming was "probably too good".

During the increasingly bitter dispute, the two sides reopened merger talks that Lanir says pre-dated last summer's flotations. Yet the mooted price of 60p a share felt like an insult and Lanir started the legal proceedings last December.

"When they came up with 60p, mentally I was exhausted," he admits. "For me personally, to walk away with a few hundred million dollars, it was a reasonable solution. But I couldn't accept it for two reasons. First it was my name. Secondly, I knew all those investors. I couldn't look at them and say I took you all this way down. I felt very low ... but their [PartyGaming's] greediness drove me to fight back."

He is no real gambler, despite the online poker having made him worth almost $300m. During the negotiations, his lawyers urged him to hold out for much more. He didn't. "There was a 95% chance of winning $2bn or a 100% chance of getting a quarter of that. I didn't want to risk the company for 5%."

He has nothing but disdain for Richard Segal, former PartyGaming chief, whom he accuses of causing "bad blood" before leaving this year after the settlement. "At the end of the day a lot of things are personal and illogical. I'm sorry that we couldn't find a way to merge ..."

Conversely, he "loves" new Party boss Mitch Garber and and is great friends with the founders, believing a merger would have happened under the current regime. "People in this industry are good friends. There are lots of young people who have made a lot of money in a relatively short time."

Such riches and the largely unregulated nature of online gaming sites have led to accusations that they fleece unwitting players, known as "fish" to be fed to the professional "sharks" who need lots of players to maintain liquidity. There is an ever-present risk of a crackdown in the US.

Naturally, Lanir is unconvinced of the need for further regulation. "It's an entertainment, like any other." Brandishing his Coca-Cola can, he says: "You see this, it's poison. It kills. And lying out in the sun kills. Air pollution? People die because of this. With gambling, nobody dies - 99% is just entertainment, a flash of adrenalin, a rush of endorphins. I would rather run for 10km to get this feeling, but others wouldn't."

Lanir admits to losing $30,000 in one go once but remembers with horror his first foray into the world of online gaming. "In the beginning I played casino and I lost $500 and it was a disaster for us. I told my wife and we worried about it all night."

When he started Empire with a friend from the army he was at a low ebb. "At that point, I was 31 years old and the future was behind me." Apart from the nightclubs, roller blading and gambling, Lanir is best known in Israel as the only son of Avi, a pilot tortured to death by the Syrians during the Yom Kippur war, widely believed to have died rather than spill state secrets. Noam was six.

Pressure

Lanir fears a televised hagiography of his father prompted the blackmail attempt. In the film, someone says of Avi, "Everything about him was perfect." A friend from Noam's military service years says the pressure of joining the pilot training corps made the young Noam "wild". He was kicked off the course after 18 months. Asked why, Lanir says: "There weren't one or two reasons but many reasons because I was a VIP."

After military service, he travelled in the far east, "doing jobs only illegal immigrants did", before coming back to get involved in nightclubs.

"The army got rid of a terrible soldier and lost a great chief of forces when they let me go. I had to create an organisation where I could be the chief of forces." He has always felt insecure.

"The first time I ever started to feel secure was after this struggle with PartyGaming." Why? "I felt insecure but my young sister didn't, even though our environment was the same. Other kids lose parents but they don't feel the same or go the same direction. They took those fears to a different route. I took it to this route. It is important to me to make money."

After losing a lot of money in the Israeli stock market crash of the 1990s, he became much more risk-averse and ended by running the lottery for a year, the "first and last time" he has worked for anyone else. He saw a friend play casino games online and, not even knowing how to send an email, he says, "the minute I saw it, it drove me mad ... I knew it would be a great business".

After the shenanigans with PartyGaming, he has returned to running the business, something he had "lost focus on". He hopes to spend the $250m on two acquisitions by the end of this year. After buying two small gaming companies this year, he is dismissive of the suggestion that he could give money back to shareholders, arguing that applying his marketing expertise to a new company adds more value.

He is "checking" a number of targets, which are likely to be complementary businesses such as sports betting sites. "We will take into 2007 a completely new company," he says.

With a family history that includes a Mossad member, far-right links and an academic mother from a left-leaning family, he is a fount of knowledge about Jewish history. He is so impressed that a journalist is willing to interview him in his beloved homeland that he arranges a helicopter trip to see some sites.

As we look over the Sea of Galilee I say that his mother must be pleased about the way he has turned out. "I'm not so sure," he says slowly. "I think she would have preferred me to be a professor, or something in the sciences."

Lanir on Lanir questions:

What drives you?

What drives you generally in life is your spirit. My ambition and creativity was always focused on business. It was important to me to make money

What are your remaining ambitions?

I want to take this company to be a $2bn company. It's not about amount of money, it's about ego - and the human ego is never sated

How do you like to relax?

On a boat

hat computer games do you like playing?

I was addicted to many games - simple ones like Minesweeper, Brick-breaker. Pac man, wow

How do you want to be remembered?

I'm not dealing with this. I live in the present