A $700 million Poker Tour bet - Tuesday 12th of July 2005

Texas Dolly" is making his biggest bet ever.

Poker legend Doyle "Dolly" Brunson and an unnamed investor group on Friday made a $700 million offer for WPT Enterprises Inc., a company controlled by Minnetonka businessman Lyle Berman.

WPT created the World Poker Tour, a televised tournament on cables Travel Channel thats credited with sparking the current poker boom. Berman was the original developer of Minnesotas Grand Casino and is the biggest individual shareholder in Minnetonka-based Lakes Entertainment Inc., which owns 64 percent of WPT.

The surprise bid sent shares of California-based WPT soaring nearly 60 percent, to $28.20, before the Nasdaq Stock Market halted trading. After trading resumed later in the day, shares closed at $26.50.

Brunsons bid was valued at about $35 a share, nearly twice what WPT shares were trading for at the beginning of the day.

Shares of Lakes Entertainment jumped more than 25 percent, to $18.70, before the Nasdaq shut down trading in that company, too. Its shares closed at $18.09.

"Its been an interesting day," Berman said Friday. He said the offer was "sketchy -- just a piece of paper that says, Heres a number. We dont even know enough now to try and assess it."

WPT turned its first profit in 2004, with revenue of $17.56 million. The $700 million offer amounts to about 40 times WPTs annual revenue.

Berman said the size of the offer is linked to WPTs recent entry into online gambling, a $2 billion market thats growing worldwide at about 10 percent a month.

"Were heading into that business, and the future possibilities are endless," he said. "The high multiple is a perception of how well do in the online gaming space."

As an example of the potential of online gambling, Berman pointed to the initial public offering last month of the British company Party Gaming.

It currently has a market capitalization of about $8 billion.

Based on his ownership, Berman would stand to pocket about $90 million if WPT took the Brunson offer. He said its too soon to say whether that would happen.

"Were talking to the attorneys," he said. "Were trying to understand who were dealing with, get a little more information before were prepared to analyze it."

The offer comes as Lakes Entertainment tries to resolve a dispute with the Securities and Exchange Commission over its accounting. Lakes has contracts to develop Indian casinos with tribes in several states and has loaned millions of dollars to the tribes that are to be paid back from future casino earnings.

Lakes treats the loans as accounts receivable, while the SEC believes they should be counted as expenses, Berman said.

In April, the SEC threatened to delist Lakes Entertainments stock because the company failed to file its year-end report on time. Berman said he expects the SEC dispute to be cleared up within three to four weeks.

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