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Billionaire Plays Her Cards Right in Online 'Gray Market'

November 27, 2005|Joseph Menn | Times Staff Writer

Ruth Parasol has made a fortune selling vice to the masses.

Through phone sex, then Web porn and most recently online poker, the 38-year-old lawyer has leveraged a succession of new technologies to become a self-made billionaire whose net worth rivals those of Internet entrepreneur Mark Cuban and Las Vegas mogul Steve Wynn.

Like Cuban, Parasol was quick to recognize the Internet's power to transform daily life. And like Wynn, she understood the financial upside of gambling -- even though the Justice Department says most of her customers are breaking the law when they ante up at Parasol's PartyPoker.com.

But unlike Cuban and Wynn, who have grown famous, few outside the porn or gambling industries have heard of Parasol, a mother of two from Marin County who shuns publicity and lives in the Mediterranean tax haven of Gibraltar.

In industries full of sharpelbowed men and sometimes shady characters, Parasol stands out. People who know her describe Parasol as "drop-dead gorgeous," a tough negotiator and a skillful investor who uses her legal training to navigate at the fringes of the law.

Before founding PartyPoker, Parasol spent years bankrolling or advising some con men and shysters, but she has never been accused of a crime or questioned by law enforcement. Associates describe her as perennially happy and even bubbly, a licensed pilot with an instinct for getting in early and profiting from what one of her legal advisors calls "gray-market opportunities" before the rules of the game change.

That Parasol would become one of the wealthiest women in the world with a net worth of $1.8 billion -- ranking alongside Cuban and Wynn, among others, at 164th on the Forbes list of the 400 richest Americans -- shocks few who knew in her high school. At the exclusive Marin Academy, Parasol was known as "Ruthie Ruthless" and posed for her senior portrait in a fur coat with the caption "Diamonds Are a Girl's Best Friend."

Students debated how seriously she took that slogan, but none doubted her brains or ambition.

"She's an amazing woman," said venture investor Cheray Unman, a friend from age 14. "She's very, very smart."

Although the Justice Department says Internet gambling is as illegal as it is popular, most of the $8.2 billion that analysts estimate the industry raked in last year came from the United States. Firms such as Parasol's Gibraltar-based PartyGaming, which has half the online poker market, escape U.S. jurisdiction by incorporating and operating in countries where gambling is lawful.

Some legal experts say Parasol risks arrest if she returns to the United States, and her company warned in paperwork before its initial public offering in the summer that a concerted U.S. effort could shut it down. But law enforcement agencies have shown no inclination to attack.

Lax enforcement has allowed sites such as PartyPoker.com to thrive and grow -- analysts project that annual revenue from online gambling will reach $22 billion by 2009.

Because global regulations are patchy, myriad complaints to federal and state authorities go nowhere, and gamblers stand little chance of recovering money lost to cheating or other scams. Entrepreneurs with unsavory pasts are attracted by such legal ambiguities and face no competition from the blue-chip companies that helped clean up Las Vegas.

A former top U.S. bookie, Ronald "The Cigar" Sacco, founded a pioneering Costa Rica-based betting service called BetCRIS. Sacco's record includes more than a dozen convictions on gambling, money-laundering and other charges.

Then there's Charlo Barbosa, a Vancouver, Canada, man who started publicly traded Poker.com Inc. before being accused of selling online porn services via software that charged unwitting long-distance subscribers as much as $7.39 a minute. The Federal Trade Commission sued and won a settlement stopping the practice.

Operators such as Sacco and Barbosa give some outsiders pause.

"With all gambling, there's an element of trust involved," said David G. Schwartz, director of the University of NevadaLas Vegas Center for Gaming Research.

At PartyPoker.com, as at other sites, users download free software, then establish a betting account with their credit card and an electronic payment service. Players choose from a variety of card games. Winnings are credited to their accounts and losses are deducted.

To ease the concerns of investors and players, PartyPoker parent PartyGaming stresses that it is licensed and regulated by the government of Gibraltar and that it has hired respected managers and directors from mainstream industries. On its June debut on the London Stock Exchange, PartyGaming was valued at $8.5 billion.

Parasol has no executive role in the company, but the 32% stake she kept with her husband, Russell DeLeon, along with the shares they sold when their company went public, gave them a sudden combined fortune of $3.6 billion.

Parasol declined interview requests for this article.

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