PartyGaming, the world’s largest internet poker company, has confirmed the price range for its planned initial public offering at between 111p and 127p.

At the mid-point of this range the Gibraltar-based group would achieve a market capitalisation of approximately £4.76 billion. At that level the company, which owns Partypoker, the online poker site, would enter the FTSE 100 index.

However, today's valuation is lower than the $10.5 billion (£5.8bn) PartyGaming had indicated in pre-marketing literature. The cut in the price has led to speculation that the price range was reduced amid concern the group would have been overvalued.

It is understood that the price cut followed a lengthy pre-marketing exercise by Dresdner Kleinwort Wasserstein (DKW), the investment bank leading the float.

Concerns have been raised over the status of online gambling in the United States, a key market for PartyGaming. One executive of an online gambling site operator based in Antigua, which accepted bets from American customers, was imprisoned under the US Wire Act in a case that led to a hearing at the World Trade Organisation.

An institutional roadshow will start today. But the shares are only being marketed in the UK and Europe.

Sellers include the founders, Ruth Parasol, a Californian lawyer who made her first fortune a decade ago through pornographic websites, and Anurag Dikshit, a computer services graduate from India.

The chief executive, Richard Segal, and finance director, Martin Weigold, have agreed not to dispose of shares, other than in relation to the offer, before June 30, 2006, without the consent of DKW, which is acting as sponsor, sole global co-ordinator and bookrunner.

The company employs around 1,000 people, more than 900 in India working on customer support and software development. It has a head office in Gibraltar and marketing staff in the UK. It revealed earlier this month that it had made a pre-tax profit of $371.7 million last year on sales of $601.6 million.

At the time, Mr Segal said: 'These results are further evidence of the growth in the online gaming market and specifically online poker."

Mr Segal said that building the "Party" brand in broader geographic regions was a priority as well as creating new games and exploiting new channels to market such as wireless applications.

The company believes the online gaming market is fragmented and geographically diverse which presents opportunities for strategic acquisitions and market consolidation.

"A listing will provide us with a solid foundation to achieve these goals as well as bringing further transparency and credibility to the Group internationally," Mr Segal said.

The group said it expects to pay a final dividend in May 2006 in respect of the year to December 31, 2005, worth around $200 million.

The announcement of the final offer price and the start of conditional dealings on the London Stock Exchange are expected on June 27. Unconditional dealings are expected to start on June 30.

The offer will consist of 781.8 million existing shares (before an over-allotment option of up to 115.3 million shares), representing about 20.6 per cent of the company’s issued share capital.

PartyGaming will not receive any proceeds from the sale of shares by the selling shareholders.

Calyon, Commerzbank Corporates & Markets, Enskilda Securities, HVB Corporates & Markets, ING Wholesale Banking and Mediobanca - Banca di Credito Finanziario are acting as co-lead managers.

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