How an Israeli dentist pulled a £500m poker profit

While in Monte Carlo for a dental conference in 1996, Aharon Shaked wandered into one of the town's famous casinos. There, amid the glitz and the excitement, it suddenly struck the Israeli dentist that gambling was an activity perfectly suited to the internet.

The online gaming business he went on to found later that year, 888 Holdings, announced yesterday that it would sell its shares on the London Stock Exchange, netting Mr Shaked, 55, and his family a fortune of about £500m.

Related articles

• 888.com founders to net £175m
• Search the news archive for more stories

The company, which runs the 888.com poker website and the Casino-on-Net gambling site, was among the first to offer gamblers the chance to place a wager on the internet, when it began operations in 1997. It now claims up to half the world market for online casino games and a significant part of the internet poker sector.

The business will be valued at some £700m when it floats in London in the next few weeks. John Anderson, chief executive of 888 and a former Ladbrokes director, said the flotation would help build a war chest for the company to make acquisitions. "[It] marks an important step in our goal to become the market leader in the global online gaming entertainment industry and will enable us to increase further our brand profile, recognition and credibility."

The Shaked family owns 70 per cent of the company, so the London listing will value their holding at £500m. They are likely to take about £125m in cash by selling some shares at the time of the flotation, while continuing to hold the remaining shares.

Mr Shaked said: "Our money is new, as you say nouveau riche. But we're not ashamed of that."

Mr Shaked's father was a truck driver and he grew up in an Israeli home with just two rooms; the children would sleep in the bedroom while their parents slept in the living room. Later, their father became more affluent as a small-time builder and property developer.

To get the gambling business started, Mr Shaked and his brother, Avi, sold their homes and mortgaged other property, raising about $1m (£550,000).

They contacted software engineer Shay Ben-Yitzhak, who had never been to a casino. Mr Ben-Yitzhak wrote the programme for a casino site - which was the company's first website - using a book on gambling.

Mr Shaked now lives in a small town outside Tel Aviv, Netanya, and said that he gets most pleasure out of helping underprivileged children. He funds facilities for the children, including internet clubs. "That makes us feel good. It is what makes us happy," he said.

Mr Ben-Yitzha, now 37, has also done well out of 888. His 20 per cent stake will be worth £140m. Like Mr Shaked, he likes to keep a low profile in Israel and said he was excited to be at the press conference held in London yesterday. He said it was only the second time that he had ever worn a suit.

He is based in Tel Aviv and, unlike Mr Shaked, still works full time in the business, as its chief technical officer. "I don't have a lot of time to think about the money," he said.

Profitable since its first year, 888 was first run from a tatty room with no air-conditioning in Antigua - it was based in the Caribbean island for legal reasons. "It was so hot in that office in Antigua that we had to go around without any shirts on," Mr Ben-Yitzhak said.

In the first six months of this year, 888 reported a profit of $24.5m after taking bets worth $124m. The company, which now has its headquarters in Gibraltar, still remains in uncertain legal territory. Over half its revenues come from punters in the US, where online gambling of any kind has been declared illegal by the Department of Justice.

Even that is unlikely to put off investors in London. When a rival business, PartyGaming, which is the world leader for online poker, floated its shares in London earlier this year, it was valued at £4.6bn. It is now worth £6.3bn.