Say a cheery good-bye to Empire Online Ltd. (AIM:EOL) chairman Noam Lanir. At least for now, and come shake the hand of the next Israeli billionaire owner of an online gambling company: the Scheinberg family. “The Times” reported yesterday that the world’s second largest online gaming company, PokerStars, controlled by the Scheinberg family of Israel, is transferring its base from Costa Rica to the Isle of Man, possibly indicating that it is planning an IPO on the London Stock Exchange (LSE).
According to the prospectus of PartyGaming (LSE:PRTY), the world’s largest online gaming company, PokerStars has an 8% share of the market, compared with PartyGaming’s 54%, and Cassava Enterprise (Gibraltar) Ltd.’s 6% (through its PacificPoker brand). “The Times” says PartyGaming has obtained a license from the government of the Isle of Man and plans to move to the island later this year.
Founded in 1999, PokerStars is considered a pioneer of online poker, together with ParadisePoker, which currently has a 5% share of the market. Sources inform ''Globes'' that PokerStars’ rake (commission from players) is $400,000-500,000 a day, its annual turnover is $150 million, and its net profit margin verges on 50%.
PokerStars has built much of its reputation on tournaments, such as the World Series Of Poker Champions and the World Championship of Online Poker. If PokerStars holds an IPO, it will reportedly be at a company value in excess of $1 billion.
PokerStars joins five other online gaming companies considering going public on the LSE over the coming year. Cassava will probably be the first of the five, holding an IPO at a company value of $1.5 billion next month on the LSE. The other four companies are Gala Group, Coral Eurobet, Betfair, and Trident Gaming. The company values for the IPOs will be hundreds of millions of dollars each.
“The Times” reports that PartyStars is looking for a new CEO to run the company from the Isle of Man. Isle of Man e-gaming development director Bill Mummery told “The Times” that the decision by PokerStars to relocate there was a “milestone” as the island sought to position itself as an attractive jurisdiction for online gambling operators.
Although controlled by Israelis, Cassava is registered in Gibraltar, and Empire Online is registered in the British Virgin Islands.
Mummery told “The Times” that he could not comment on suggestions that PokerStars might be considering an IPO. But he said that moving to a jurisdiction with strong financial and risk controls would “help companies get backing from the City and other sources of funding”.
“eGaming Review” editor Alun Bowden told “The Times”, “There are a lot of reasons for moving to the Isle of Man, which provides PokerStars with a base for European expansion. But it would also suggest to me that an IPO was probably on the cards.”
Although an IPO by PokerStars is only a supposition, “The Times” says that analysts covering public online gaming companies believe a listing would enable it to become one of the industry’s main consolidators. One analyst said, “There are more than 1,000 internet poker sites, but in three or four years I would expect there to be no more than 50 or 60. As growth slows, so consolidation will become the name of the game.”
Published by Globes [online], Israel business news - www.globes.co.il - on August 4, 2005