Call it another losing round at the poker table. Back in action after missing the first go-around is a key player, Lyle Berman, chairman and CEO of Lakes Entertainment ($13.79). Lakes is a gaming-related company that owns 64% of WPT Enterprises ($15.20), the Hollywood, Calif., producer of the popular World Poker Tour events televised on the Travel Channel. Mr. Berman is also WPT’s executive chairman.

His absence from the poker table refers to my repeated inability to reach him or any of his top brass for comment in late March when I was working on a column on the poker explosion, a burgeoning $2 billion annual business. I initially thought it would surely be a positive investment piece, given the surging number of Americans playing poker, roughly 50 million (both online and at home), and a flock of TV poker shows that are drawing big ratings. I was wrong. After doing my due diligence, I came up with a negative slant (“Watch it, Those Poker Stocks Could be Real Dogs”; New York Sun, April 4). Some key reasons:

Serious questions about WPT’s and Lakes’ earnings power, given intense competition in Internet gambling, a business WPT will enter in June.

* Ultrarich stock valuations.

* Extremely toutish stock forecasts as high as $100 a share for each stock from investment types who boast reasonably close relationships with what has been described to me as the “highly stock promotional management” of both firms.

* A difficult battle between the Securities and Exchange Commission and Lakes, which delayed its 2004 annual report after regulators questioned accounting involving development costs and advances related to Indian casinos in its 2003 financial statement. (Since my earlier column, Lakes, reflecting its hassle with the SEC, was informed April 21 by Nasdaq that it is not compliant with continued listing standards and is subject to delisting).

Also, I could not help become somewhat wary. You would, too, following an incident that took place during my unsuccessful efforts to solicit comments from Mr. Berman and WPT’s chief financial officer, Todd Steele. I received a call from a money manager, an owner of WPT shares whom I hadn’t spoken to in some time. He called to say he had been told by WPT I was working on a story about the company. He also said he was sure he could arrange a callback from management, if I were to give assurances of a favorable story. I declined that offer. Mr. Berman was unhappy with my column and after an exchange of letters, we agreed to a follow-up conversation in which he could have his say.

In our chat, his most newsworthy comment was his contention that Lakes was getting close to resolving its SEC problems. He also complained the SEC was questioning a “100% standard industry practice.” He said Lakes has 10 casinos in the development stage, nine with Indian tribes, and that construction would start later this year. He also cited the company’s balance sheet strength, pointing to a net asset value of $150 million and no material debt.

One WPT tout suggests the company could earn 40 cents a share this year on revenues of $17.56 million. Mr. Berman’s response: “If we do well in Internet gaming, that’s a very achievable figure.” He also pointed out that the three biggest Internet gaming companies, including kingpin PartyPoker.com, were all part of the World Poker Tour.

Interestingly, despite the poker boom, both Lakes and WPT are attracting a sizable and rapidly growing number of short sellers. For example, Lakes’ current short interest stands at 2.53 million shares, up 15% since mid-January, while WPT’s short position of 1.79 million shares, a third of the float, is up 31.6% since January.

Why such a ballooning short interest? One short seller seems to sum it up, citing “ridiculously high stock valuations, absurdly high earnings expectations of the bulls, and the threat of a Nasdaq delisting.” As for Lakes and WPT shares, he thinks if their prices were cut in half, both would still be way overvalued. Mr. Berman’s reaction: “I think the shorts are foolish.” In the case of Lakes, he also thinks the shorts are ignoring potential cash flow from the 10 casinos.

Meanwhile, one knowledgeable tracker of poker stocks, David Ehlers, chairman of Las Vegas Investment Advisers, notes there are more than 200 Web sites on which you can play poker, including a number of public vehicles. “But from an investment standpoint, there’s no way we can feel comfortable playing them because no one is making enough money to warrant the astronomical valuations,” he tells me. “How many balloons and bubbles,” he asked, “have we seen over the last 50 years? Poker, even though it’ll be a phenomenal business, is just the latest one.” As for WPT and Lakes, Mr. Ehlers concludes, “There’s just not enough there to support the stock prices.”