The busness - Patrick Hosking tells it straight on poker

The thirtysomething entrepreneurs behind PartyGaming are worth $2bn each. Not bad for a pair with ba

If you want a picture of the service company of the future, look no further than PartyGaming. In the next few days, this online poker company will float on the London Stock Exchange. Eight years ago, it was a mere gleam in the eyes of its founders - the former porn entrepreneur Ruth Parasol and the computer program whizz-kid Anurag Dikshit.

PartyGaming expects to be valued at between £4.4bn and £5.1bn ($9.3bn). That would give it a price tag similar to blue-chip companies such as Boots or Sainsbury's or ITV, and considerably higher than British Airways or Dixons.

We all know how quickly the apparent value of a business can be destroyed. The $80bn tag for Enron evaporated in weeks as the fraud relating to that company unfolded. But wealth creation can be quick and spectacular. The prospect of large and growing profits can put eye-watering valuations on the youngest of businesses.

Poker, particularly online poker, is trendy. PartyGaming, whose main business, PartyPoker.com, began operating only in 2001, is the whale of the industry - accounting for up to half the worldwide market. At any time, up to 80,000 people across the globe are hunched over their screens, playing its games. PartyPoker.com has a million registered players.

The appeal is obvious. At the click of a mouse, players can join a table day or night, playing for whatever stake they choose. Someone, somewhere in the world, is always ready to play. For the majority, it is a harmless, entertaining and affordable pursuit. For a small minority, it has led to obsession and ruin.

Working to the premise that the winners in the California Gold Rush were not the diggers but the pickaxe sellers and brothel-keepers, PartyGaming

does not actually act as principal. It takes no gaming risk. It is merely host or facilitator. Customers play each other. PartyGaming takes money off everyone through the so-called "rake" - the proportion of stake money skimmed off as commission, typically 3 per cent.

Revenues have grown from $30m in 2002 to $602m in 2004. Analysts at Morgan Stanley reckon the company will have no trouble scooping in $966m this year and $1.48bn by 2007. It is a volume business. While revenues soar, costs grow much more slowly. It may be a giant, but it still only employs 1,100 people. Profits grow exponentially. This explains PartyGaming's phenomenal valuation. Dikshit, 33, could be worth £2bn ($3.6bn), as could Parasol, 38, and her husband, another large shareholder.

The company is remarkable not only for its Midas touch, but also for its rootlessness. It belongs nowhere. It began life in the Caribbean and is now headquartered in Gibraltar. The great majority of its customers are Americans. Its employees are mostly Indians - based at a call-centre in Hyderabad. Its computer systems are in Canada - on a Mohawk reservation. Its marketing people and stock-market listing are in London.

PartyGaming is a virtual company. Selling a service over the internet, it can locate bits of itself wherever conditions are most favourable: Gibraltar and Canada's Kahnawake Reservation for their gaming regulators' friendliness; India for its low wages; Gibraltar for its low taxes (PartyGaming is paying just 6 per cent of its profits in tax, which compares to corporation tax in the UK of 30 per cent); London for its advertising nous and stock-market respectability.

This versatility and lack of accountability is not without tensions. The big story of the imminent flotation is that almost 90 per cent of the company's customers are in the US, where online gambling is of questionable legality and in some states plain illegal.

The PartyGaming directors could, in theory, be charged, fined and even jailed if they set foot on US soil. They include some well-known British businessmen, such as Michael Jackson, chairman of the software group Sage, and Brian Larcombe, former chief executive of the investment firm 3i. The PartyGaming prospectus is a porridge of health warnings spelling out the risks to investors. The company could be badly hit, for example, if the US put pressure on the banks to stop processing the payments that enable Americans to place their bets.

These risks are being eagerly seized on by potential investors as a lever with which to force down the issue price of the shares. It is doubtful whether Uncle Sam is really going to clamp down seriously. PartyGaming has been supplying Americans with the delights of Texas Hold'em and online craps and roulette for the past three years with barely a squeak from US legislators or regulators.

PartyGaming's phenomenal story is a parable of our times. It is a thoroughly modern company. But it should give pause to every tax-gatherer, regulator and future job seeker in the west.

Patrick Hosking is investment editor of the Times