Online casino operator 888 set the price for shares in its imminent flotation at 175p, the low end of the indicated range, despite insisting there was strong demand among City investors for the deal.

The shares then initially edged ahead as they began trading this morning on the London Stock Exchange, standing 2p higher at 177p at the end of the first hour of trading.

But, in a broadly flat wider London market, 888's shares fell in late morning and continued their descent during the afternoon trading session.

Shortly after lunch, 888 was changing hands for 164.75p, nearly 6 per cent below the issue price.

The launch price valued 888 at about £590 million ahead of the listing against more recent hopes it could have been worth as much as £715 million.

And when it initially unveiled its float plans, 888 had indicated it was preparing for a valuation as high as £800 million.

The pricing, set last night by 888's financial advisers at HSBC, came as the shine begins to come off internet gambling stocks following the collapse earlier in the month of shares PartyGaming.

PartyGaming, which only listed in June, lost more than a third of its value after it warned investors not to expect explosive revenue growth in the future.

The revenue alert sent shockwaves through the City, which until then had been an unequivocal fan of the internet gambling industry, and as well as denting other gaming stocks raised fears that 888 may even have to cancel its listing plans.

But, although it scaled back its ambitions - setting a wide indicative offer price of between 162p and 212p, 888 and its bankers pressed ahead with the float, and priced the stock at 175p.

A midpoint price would have seen the shares price at 187p.

But 888, which is floating 25 of the company, maintained that a "broad base" of professional investors had ordered the shares from both the UK and continental Europe. "The offer was well received by investors and was approximately five times subscribed," it said this morning.

Brokers at Bridgewell Securities, Numis and Panmure Gordon also worked on the listing.

John Anderson, chief executive of 888, said: "We are delighted that 888's IPO [initial public offering] has attracted such strong support among leading UK and European institutional investors.

"We have a clear strategy for creating sustainable shareholder value by becoming the market leader in the online gaming industry and continuing to provide our members with a comprehensive range of gaming activities in a secure and trusted environment."

When it set the indicative offer price earlier this month, 888 said its gaming revenues grew by 14.2 per cent in the first half - and in online poker revenues had jumped by 226 per cent in the period as compared with the same time last year.

Declaring its confidence in the "continued growth in the casino business", 888 said it made net gaming revenues of nearly £13 million in both July and August.

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