The Interview: The Empire strikes back for online poker

Noam Lanir Chief executive, Empire Online
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The Independent Online

When I go to meet Noam Lanir, the chief executive of the newly listed internet poker business, Empire Online, and one of the latest to make millions out of an industry that is the hottest topic in the City this summer, I am begged by his advisers to be gentle with him.

He had no sleep the night before, they tell me, having arrived late in London from his native Israel, and is feeling rather tetchy. His English is also not so good, and so I am left to wait for what I imagine will be a fat, grumpy, unintelligible, spivvy internet bore, and fear the imminent interview is not going to go well.

Aggravating the situation is that my first questions will inevitably be about the fact that despite the hype around internet poker and the phenomenal profits generated by Empire, whose brands act as a marketing front for other people's gambling websites, its shares have not fared well since listing. Next week, the much larger PartyGaming will mount its audacious attempt to break into the ranks of Britain's blue-chip companies in the FTSE 100. Empire's share performance is surely a sign that investors, deep down, believe the success story of internet poker is mostly bluff.

Empire's float has undoubtedly been overshadowed by PartyGaming and some incredulity that internet poker can be so profitable and yet illegal in its major market, the US. Authorities in the US are trying to shut down internet gambling and may even try to throw directors in jail - issues that have scared off some investors.

Amid this background, enters Mr Lanir, who, it turns out, is the son of a famous Israeli fighter pilot and a one-time nightclub playboy. He is one of the new breed of internet poker millionaires, striking lucky not as a player but as the brains behind the business. A wink and a flash of his rakish smile manage to confound most of my expectations and once in his flow his English, if sometimes stilted, is almost perfect. Despite the sleep deprivation, he is a bundle of uncontrollable, easily excitable charm, although the coffee and Nicorette gum add a slightly maniacal edge to him at times.

"The share price is only temporary," he says without concern, having already cashed in £50m from the float. We will be judged on our profit numbers and on the deals we make in the future."

Empire's performance record so far has been impressive. The company acts as what is rather unhygienically known in the industry as a "skin" for other websites. It delivers customers to companies such as PartyGaming, sending people that arrive at its sites to PartyGaming's website to gamble. Empire's main partner is PartyGaming and it gets a share of the winnings from every customer it delivers. Revenues have tripled in two years to $65m (£36m) and more than half of its revenues translate straight into profits.

Within a few minutes of the interview, Mr Lanir is far from grumpy, practically bouncing off the walls with enthusiasm about the growth in the online gambling industry yet to come. He ridicules fears that the US will start to arrest him and his peers, laughs at his own delusions of being a good poker player (he admits to losses of $30,000) and says time will be the eventual judge of the internet poker business.

He also dismisses suggestions that finding investors was difficult, given the legal concerns over the business. "Investors in London are very open-minded about the internet gambling industry. Regulation is a risk, but that's why shares are priced where they are, and not where Google shares are priced. People see these unbelievable numbers from internet poker companies. But the valuation is low because of the sentiment about regulation."

And that is all he has to say on the matter of the legality of internet gambling, refusing to discuss it further. People can read the risks laid out in Empire's prospectus, he feels, and then decide for themselves if they want to invest.

If he is unperturbed about the threat of regulation, expect even less concern about gambling addiction. When asked about the social harm caused by problem gambling, his reply is that I should go to India for a few months and learn to relax. To him, poker is entertainment and there are far more dangerous things in life to worry about. "I have four children that are addicted to junk food. Junk food kills! Poker is a game of skill. You need patience to win," he adds, unable to contain a few giggles about his own losses (a self-confessed lack of skill and patience is to blame). "Most of our players are only with us for a small time, betting small amounts. They come to us for entertainment."

The 38-year-old, as always, had a fearless approach to making his own way in the world. His father is something of a war hero in Israel, a fighter pilot shot down and captured in the 1973 war with Syria. He was tortured before being murdered by his captors.

Mr Lanir did his obligatory military service in Israel, although did not find the air force as much to his liking as his father did. "Do you think I am the kind of person who should be in that environment?" he asks, leaning over the table towards me with another flash of that smile.

The strict, ordered discipline of the military is clearly not the place for this restless entrepreneur. His early business years were spent running nightclubs in Tel Aviv, then he hit upon the sudden craze for in line skating, importing them to Israel. He then ran one of Israeli's three state lotteries.

By 1998, however, he was becoming interested in the opportunities emerging with the internet. "I am not a genius. I know nothing about technology. I am a good trader and I am able to spot trends from an early stage. I know about marketing and that seemed to be the fastest way to start making money in internet gambling." The marriage of poker and the internet was, to him, ideal, and so began Empire Online.

Isn't poker, like in line skating, just a fad, too? "Nothing can keep growing for ever. But poker has not yet reached its peak. There are many more markets that we can take it to." He has had great success in driving up customer numbers in Denmark and Sweden and is now beginning an assault on the UK.

On the face of it, Empire Online, registered in the British Virgin Islands and based in Cyprus, is run by an irreverent, mercurial Israeli entrepreneur, and operates in an industry that, outside the UK, is questionably legal. It has all the hallmarks of being a dubious outfit.

Little wonder, then, that Lord Steinberg, the chairman of Stanley Leisure and about as establishment as the gambling industry gets, bagged himself a £200,000 salary and £200,000 of share options to be its chairman. He has brought credibility and weight to Empire, opening doors that might otherwise have been closed.

But with PartyGaming - with its secretive shareholders and their seedy pasts - set to defy its critics and soar on flotation next week, sentiment towards Empire Online will also rise, regardless of Mr Lanir and Lord Steinberg. It may well be the cynics of the industry who are left feeling grumpy.

From clubbing to chips

Age: 38

Salary: $400,000 a year, plus a bonus of up to $400,000. His stake in Empire Online is currently worth £108m

Lives: Israel

Family: Married with four children

Career: 1990-1994, nightclub owner in Tel Aviv; 1995-1996, ran in line skating business; 1996-1998, managed one of Israel's state lotteries; 1998, set up Empire Online

Interests: His children and skiing in the French Alps.