One High-Stakes Card Game

Can cable TV's World Poker Tour keep making money at such a crowded table?

Steve Lipscomb may not have ventured into TV poker with the strongest hand, but so far he's winning the jackpot. The former comic and lawyer did not invent the technique that lets viewers see players' cards. Nor did he forge a deal with the hottest TV network. Yet his World Poker Tour series, launched in March, 2003, has become a ratings smash on the Travel Channel and a trendsetter in the industry. His secret: turn poker into a slickly produced reality show. "It's dazzling, like you're on a movie set," says Antonio Esfandiari, 26, who won $1.4 million in a WPT tournament last season. Viewers can follow the action, get close to the wacky characters populating poker rooms, and pick up tips. "We set out to capture the drama," says Lipscomb.

How long will Lipscomb's hot streak last? The buoyant 43-year-old founder and his partner, Minnetonka (Minn.) casino operator Lakes Entertainment Inc. (LACO ), took WPT Enterprises Inc. (WPT ) public last August, and the stock has almost tripled. The success of the series, which launched its third season on Mar. 2, has also spawned numerous competitors at networks such as ESPN (DIS ) and NBC that boast greater reach and cachet than the Travel Channel. That makes it tougher for WPT to maintain its dominance. No wonder Lipscomb is racing to move beyond WPT's TV deal -- worth $10 million to $12 million a year -- to make money from greater global distribution, online betting, a new Professional Poker Tour series, and licensing deals.

After all, now is the time to make multiple bets on the game. It's hot with college kids and celebrities and is the fastest-growing segment of the $10 billion Internet gambling industry. Advertisers seem to be getting comfortable with gambling shows: "Poker has become good fun entertainment," says Peter McLoughlin, a spokesman for Anheuser-Busch Cos. (BUD )

Few are more convinced of poker's potential than Lipscomb, an ambitious middle child from Knoxville, Tenn., whose Southern Baptist grandmother taught him the finer points of the game at age 8. He has already sold the show into 57 countries and hopes to reach 200 in the next few years. The company is licensing everything from playing cards and $500 poker sets to slot and video poker machines. But the big bet comes in the next few months, when WPT will move into online gaming with offshore partner WagerWorks, in part to work around government restrictions. WPT Chief Financial Officer Todd Steele says the business "has the potential to be critical to our revenues."

$70 MILLION IN PRIZES

Lipscomb recognizes that 2005 is the year that WPT has to prove it's not just lucky but, as he puts it, "real and long-term." To start, he needs to keep ramping up revenues. On Mar. 8, WPT posted full-year earnings of $752,000 on sales of $17.6 million, compared with a loss of $493,000 on sales of $4.3 million in 2003. Those results may not seem like much, but Nicholas Danna of Birmingham (Ala.) brokerage Sterne, Agee & Leach Inc. has a buy rating on the stock because he thinks 2004 is the first chapter in what's likely to be a lucrative marque. "This is the company that branded poker," says Danna. Lipscomb is trying to stack the odds this season, with a prize pool of more than $70 million as well as flashier sets and graphics.

But the table is getting crowded. Among the shows competing for eyeballs are Bravo's Celebrity Poker Showdown; Poker Superstars on Fox Sports Network; GSN's Poker Royale: Battle of the Sexes; and the National Heads-Up Poker Championship on NBC.

Then there are startups such as Casino & Gaming Television. But the biggest threat is ESPN, which airs the popular World Series of Poker. It's expanding coverage and even has a fictional poker series, Tilt.

For Lipscomb, the Holy Grail is to have WPT become what the NBA and PGA are to their sports -- the gold standard for players and viewers who care about the game. With an estimated 50 million poker players in the U.S. alone, it's likely that TV poker is here to stay. But Lipscomb and his World Poker Tour have a ways to go before they convert some big pots into a straight-flush global franchise.

By Diane Brady in New York

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