Gambling News - August 2005 Edition

"Cassava to Gamble on IPO"

Operators of Israeli online company 888.com planning to float on LSE

Cassava is now considering joining the ranks of several other online gambling companies by issuing its own IPO. The most notable company to do so is PartyGaming. According to reports, Cassava is planning to float either on the London Stock Exchange or London’s Alternative Investment Market, creating a 1.26 billion dollar company. The planned IPO comes right on the heels of several other big name online gambling companies, although Cassava, which is based in Gibraltar, has a slightly lower value than other online gambling companies which have already gone public.

Citing sources close to the company, Reuters reported that Cassava was considering an IPO in the next month and the Financial Times, quoting anonymous sources, also reported that the IPO was intended for September 1 st.

Cassava is owned by two Israeli families and operates 888.com, one of the most popular online gambling sites in the world. The Shaked brothers, Avi and Aharon, own about seventy percent of Cassava and the Ben-Yitzhak family owns about 23 percent. The British bank HSBC will be handling the IPO.

Many of the Internet gambling companies who are looking to go public have been attracted by Britain’s recent decision to legalize and regulate online gambling. In contrast to the United States, where online gambling is still illegal, online gambling is not only legal in Great Britain, but the growth of the industry is encouraged by the government as it hopes to become the world hub of Internet poker and gambling sites. However, the irony is that most of the people playing at online gambling sites are U.S. residents.

There have been a slew of businesses that sell casino software that are going public as well, in addition to the actual online gambling companies that are floating. Toronto-based Cryptologic, a casino software company, is an example of such a company. It is listed on the London Stock Exchange and recently reported first quarter earnings of about five million dollars on a turnover of twenty million dollars.

Some industry analysts are cautioning, however, that there are serious concerns within the industry and all the high-profile public activities could be hiding these. The main concern is the U.S. policy towards offshore online gambling. Internet gambling is presently illegal in the United States and this presents a major problem for companies where the majority of their customers are U.S. residents.