Five days into the U.S. online gambling prohibition era, online poker company PokerStars announced today that it will not proceed with its plan for a £1.6 billion London flotation in early 2007.
Before the passing of U.S. federal legislation banning online gambling, bankers at HSBC and Dresdner Kleinwort had been working toward bringing the company to investors this spring.
PokerStars, like online gaming companies 888 and PartyGaming, derives the majority of its revenues from the U.S. market. While PokerStars has not released exact figures, observers speculate that as much as 80 percent of its revenues are garnered from U.S.-based customers.
The company is not expected to float until 2008, if at all, according to one report.
No announcement has been made concerning the company's effort to revamp its U.S. business plan. Gaming industry experts have suggested that, to curry favor with investors, the company needs to craft a business plan that is not reliant on American revenues.
One 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 hurt rather than crucified."