PokerStars shelves plans for £1.6bn float

Click to follow

PokerStars, the world's second-biggest online poker company after PartyGaming, has shelved plans for a £1.6bn London flotation early next year.

The decision last week by Congress to outlaw internet gaming across the US has decimated likely revenues across the industry, wiped billions off the share prices of companies, and thrown the future independence of smaller players into doubt.

Bankers at HSBC and Dresdner Kleinwort had been working towards bringing PokerStars, which is 75 per cent owned by the Israeli Scheinberg family, to investors in the spring.

A flotation is not now expected until 2008, if at all. For PokerStars to appeal to investors, it would need to demonstrate a viable business that is not reliant on American revenues. Gaming industry experts said yesterday that would take up to a year. An analyst said: "In many industries, if income was halved overnight they would be sunk. But in this business, where overheads are so low, they are merely badly hurt rather than crucified."

Like its rivals in the sector, PokerStars derives the lion's share of its sales from the US. No precise breakdown has ever been given by the company, but as much as 80 per cent of PartyGaming's revenues come from across the Atlantic as do about 52 per cent of 888's sales.

Experts also forecast that the move by Congress may well spark a wave of consolidation. PokerStars, which moved its operations to the Isle of Man last year, had previously worked with the investment bank NM Rothschild on a possible sale to a rival.

Big US leisure and gaming firms, such as MGM and Harrah's, which have tried to break into online gaming before, may be tempted to swallow one of the wounded market-leaders. Smaller online firms, such as WorldGaming, Absolute Poker and Gaming VC, are now also thought more likely to favour consolidation.