Originally, Lipscomb's dream was to take the company public in five years. But the opportunity came faster than expected.
When Lipscomb and Kania went out on a road show in July 2004, visiting 13 cities in less than two weeks to sell investment bankers on the initial public offering, they met considerable skepticism. At the time, the WPT had just turned profitable, but there was still concern about poker's lowbrow image. In response, Lipscomb talked about their efforts to build and brand a sports league. "If you had been able to invest in the NFL when it started," says Kania, "you'd want in. We have transformed poker into a sports model that transcends the events themselves or the show. We have monetized the brand."
Lipscomb and Kania also realized that they could demonstrate the WPT's licensing potential by passing around a product -- a case of heavy clay casino-grade poker chips. "They all wanted to buy it," says Kania. "The analysts came with skepticism and walked away enthusiastic. The transformations in those rooms were amazing."
Initially, Lipscomb hoped the offering would debut at $6 or $7 a share, but last August it went out at $8, raising $32 million. Since then, the shares, still somewhat thinly traded, have been running as high as $20. The company's market capitalization is about $300 million -- all built on the original $3.5 million investment less than three years back.
The successful IPO has brought new challenges, including another layer of management infrastructure and regulatory costs that contribute nothing to the bottom line. But perhaps the biggest change has been in Lipscomb himself. He's been forced to take off the headset, step back from the control room, and turn over his directorial duties to someone else. He no longer has time to attend multiday tournaments every week. He will still edit the tape, but the frenetic camera instructions will be barked by someone else.
Instead, Lipscomb is busy investing the IPO money. He just launched a second league, the Professional Poker Tour, once again borrowing a page from the PGA playbook. The Professional Poker Tour will showcase the colorful full-time players who made the WPT so popular but are now getting lost in the sea of upstart amateurs making it to the final tables. Lipscomb is giving the true professionals a place to play with his new tour, which players must qualify for by winning events or placing high enough on the WPT's annual money list.
The first PPT tournament was filmed at Foxwoods last September, the day after a WPT event. Because the players and crew were already there, the PPT's overhead, time, and production costs were minimal. Now that the national poker obsession is official, Lipscomb thinks the PPT may get a bigger deal than the WPT has with the Travel Channel, possibly on a major network. "We have had several good offers," says Lipscomb.
Meanwhile, poker keeps exploding. Hollywood celebrities -- Ben Affleck, Toby Maguire -- have become serious players. Several movies are in development. Not long ago, casino poker rooms were closing all across the country. "Cut to today," says Lipscomb, "and every casino is scrambling to add rooms."
On a recent Friday night at Foxwoods, the wait to play Hold 'em was over two hours; the line just to sign up for the waiting list stretched the length of the huge room. The nation's largest casino-based poker room, it has been enlarged repeatedly and still cannot satisfy demand. "The hunger is insatiable," says Kathy Raymond, the Foxwoods poker room manager. "Since April 2003 we have seen a constant increase in average hours played and number of tables in use, and it just won't stop. The World Poker Tour has taken an American tradition and merged it with the American Dream, and there is no stopping it."
Midway through the WPT's third season, individual tournament prize pools surpassed the $10 million mark. More to the point, the WPT recently released financial results that showed fourth-quarter revenue had leapt from $379,000 in 2003 to $5.7 million in 2004. Revenue was $17.6 million for the year, and the company turned a profit of $752,000.
Just days before the Academy Awards, many of L.A.'s brightest stars turned out for a much different kind of celebration, the World Poker Tour Celebrity Invitational at the Commerce Casino. The normally cheery Lipscomb was even more bubbly than usual as he worked the room, exchanging pleasantries with Lou Diamond Philips, James Woods, Ed Asner, Mimi Rogers, Macaulay Culkin, Jennifer Tilly, Skeet Ulrich, Tanya Roberts, Gabe Kaplan, Ray Romano, Norm Macdonald, and Jon Favreau. As the stars walked down a red carpet and waiters hustled about with champagne, it was clear that the seedy backroom image of the game had been largely dispelled.
It would appear Steve Lipscomb has found a way to turn gambling into a sure thing.
