The City of London looks set to become the listing centre of online gaming companies as PartyGaming and Empire Online today announced plans to float here.

Gibraltar-based PartyGaming, known for its PartyPoker virtual poker tables, Starluck Casino and PartyBingo, said it expected up to 23 per cent of its existing shares to be offered for sale at the end of this month.

Analysts have said the float would give PartyGaming a market capitalisation of $10 billion.

Empire, an online poker services firm mostly owned by Noam Lanir, an Israeli businessman., plans to list on the smaller AIM market on 15 June.

Escaping US restrictions

although hugely popular in the United States, online casinos face heavy regulation there and have to base their operations in countries with more liberal approaches to gambling.

An enthusiastic campaign to shut down internet gaming sites by Eliot Spitzer, New York state’s Attorney General, and federal prosecutors has forced at least one US industry player offshore to Antigua and barred some banks and online payments leader PayPal from processing transactions there.

Gambling companies’ shares cannot be offered on US stock markets but Sportingbet has already listed in London and Paddy Power, William Hill and the Ladbrokes division of Hilton have online gaming operations.

Cassava Enterprises, which runs another Gibraltar-based online casino, 888.com, is also expected to list in London later this year. It said in March it had appointed Credit Suisse First Boston to prepare for a float and has been valued at around $1.6 billion.

PartyGaming said it chose London for its listing because "London is the stock market which best understands the online gaming marketplace."

Sceptics who fear that a second round of dot.com hysteria is descending and that online companies are a shaky bet will be noting that CSFB yesterday raised its target price for internet search leader Google’s shares – which many said would not reach $200 – to $350. Shares in Sportingbet have nearly trebled in the last year to value the owner of the Paradise Poker site at £900 million.

The poker phenomenon

Poker itself has also become a runaway phenomenon with five television programmes in the UK dedicated to screening tournaments, usually live. The World Series of Poker, screened on UK cable channel Challenge TV, offers players in Las Vegas a 1st prize of $5 million. In North America it draws more viewers than ice hockey for television rights holder ESPN.

The US press is full of stories of full-time online gamblers who have given up steady jobs or college studies to go professional. Addiction counselling services say this has sparked a massive rise in calls for help from those who just started for fun and cannot stop.

Players in Wisconsin can join virtual gambling tables 24 hours a day to compete with others in Birmingham, Melbourne or Singapore – not to mention across the US where most players log on from. One site says it has 100,000 players engaged at any one time. Some players boast of earning hundreds of thousands of dollars a year from 5-day-a-week online gaming.

PartyGaming was co-founded by Ruth Parasol, who moved into the business from the pornography industry. The company started seriously courting the City last month as it appointed Michael Jackson, Sage Group’s chairman, as non-executive chairman and Brian Larcombe, former chief executive of 3i Group, as its non-executive deputy chairman. The pair were described by analysts as "City-friendly".

Richard Segal, chief executive, said a listing would provide the company further transparency and credibility internationally. Mr Segal joined the company less than a year ago from the Odeon cinema chain where he was chief executive.

PartyGaming also reported first-quarter results today. It said it made after-tax profits of $117.4 million on revenue of $222.6 million. It also released full-year figures for 2004, showing revenue of $601.6 million, up from $153.1 million, and profit after tax of $350.1 million, from $83.6 million a year before.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive