Betfair shares valued at up to £14 each

(PA)

Betfair is set to be valued at up to £1.5bn when it reaches the stock market, after the company's shares were given an initial range of between £11 and £14. The stakes of the betting exchanges' two founders Ed Wray and Andrew Black will be worth between £261m and £333m on that range.

Mr Wray, Mr Black and Japanese telecoms company Softbank are selling shares into the float, under which 10 per cent of the company will be sold off to new investors. The wide initial range for the shares reflects debate over the future growth prospect of the exchange, which has revolutionised the betting market in Britain and beyond by allowing ordinary punters to act as bookmakers by legally "laying" horses to lose for the first time.

However, even at the lower end of the range, Betfair would be worth more than £1bn and would comfortably qualify for inclusion in Britain's FTSE 250 index of "second tier" companies. Betfair recently announced a 13 per cent rise in revenues to £340.9m in the year to 30 April. Firmer pricing details and conditional dealings are expected on 22 October. Mr Wray has said the flotation is aimed at giving Betfair greater visibility and transparency.

Betfair – which has 3 million registered users – was founded in 2000 and offers online poker and other games in addition to allowing users to bet against each other on a huge variety of different sporting events.

The company's revenues come not from bookmaking, but from charging its users a commission on successful bets. Chief executive officer David Yu last month said that the business would be able to secure further growth through expansion into further overseas markets in addition to opening up more sports products, new media channels and by entering new product areas. IG Index, the spread betting company, has set an initial "grey market" price on the shares of between £12.50 and £12.75.