888 - Casino on Net comes to London!

From http://today.reuters.co.uk/news/newsArticle.aspx?type=internetNews&storyID=2005-03-16T164211Z_01_JON638414_RTRIDST_0_OUKIN-LEISURE-CASSAVA.XML

By Gavin Haycock and Steve Slater
LONDON (Reuters) - Online casino 888.com is looking at joining the ranks of firms benefiting from a boom in Internet poker by listing this year with a valuation of about $1.6 billion (830 million pounds), the company's chief executive told Reuters.
Cassava Enterprises, the owner of 888.com and one of the world's biggest Internet gambling groups, has hired Credit Suisse First Boston to prepare the flotation, expected in the second half of this year.
"We have appointed CSFB to look at a whole range of options for us, one of which obviously is an IPO," John Anderson, chief executive of 888.com told Reuters on Wednesday.
"If that option was chosen it would be London. The logic for London I think is that the business is much more institutionally accepted in the UK than anywhere else and therefore the value should be higher," he added.
London is fast becoming the de facto listing centre for Internet gambling companies, partly because online gaming is strictly regulated in the United States but welcomed in Britain, even though most players are in the States.
Anderson said he was not surprised by the level of institutional investor, shareholder and client interest in online gambling businesses.
"This business is a very interesting one. Compared to normal businesses, I have no distribution costs, no production costs, no logistical problems, no storage costs, no stock costs. I get my cash up front. It is a pure cash business," he said.
"It is something people enjoy doing and will continue to do so. The growth in the poker has been absolutely stunning, it's a cool thing to do," Anderson added.
Rapid industry expansion, helped by better broadband access and the convenience of playing at home, has fuelled revenue growth at the companies hosting the sites.
"These are attractive growth stories. The online poker market is probably growing at over 100 percent a year," said Matthew Gerard, analyst at Investec Securities.
In January, the world's biggest online poker company, PartyGaming, said it was considering a listing that would value it at over 3 billion pounds, which would make it one of London's largest share listings for over three years.
The online gambling market is difficult to estimate, but is set to grow to over $10 billion a year.
A recent report by Edison Investment Research and Durlacher estimated online gambling revenue -- effectively the amount lost by gamblers -- exceeded $8 billion in 2004, up 37 percent from a year earlier.
But analysts estimate this represents under 3 percent of the world gambling market, and prospects were bright.
"Online gambling appeals to a wider audience than traditional gambling -- in particular to younger, more affluent computer literate customers and to women," the Edison report said. "Playing at home is not just convenient, it can also be much less intimidating than visiting a casino or a betting shop."
Poker is driving the growth. A report this month from Dresdner Kleinwort Wasserstein said sports betting represents 45 percent of total online gambling spending with other gaming representing 32 percent, but both could be overtaken by poker by 2008 or earlier.
Operators are also looking for the next big growth areas, however, with bingo and skill games and gambling on mobile phones and interactive television seen driving growth.
Companies exposed to the industry have boomed. Shares in Sportingbet have more than trebled in the last year to value the owner of the Paradise Poker site at 1 billion pounds.
Gaming VC has almost doubled in value since listing in December to give it a price tag of over 250 million pounds, while ukbetting has been rewarded for launching a new poker site.
Other beneficiaries have included CryptoLogic, a software developer for internet gaming whose shares have almost doubled in the last year, and online payment processing company, NETeller, whose market value has more than trebled to over 800 million pounds since listing in London last April.