ONLINE gambling reached the heart of the British financial establishment yesterday when the owners of the world’s biggest poker site announced a potential £5 billion flotation on the London Stock Exchange.

In a move that could rewrite the rules of wealth creation, PartyGaming, which runs the popular PartyPoker website, is expected to go straight into the FTSE index. It will appear there alongside Britain’s most famous institutions such as Marks & Spencer and Barclays.

The 1,100 staff at PartyGaming — based around a revolutionary business model which makes nothing, sells nothing and profits purely from avarice — are preparing to receive a windfall of £309 million in share options. Nine out of ten work in the customer support call centre in India.

Richard Segal, the chief executive, looks set to join the ranks of Britain’s best-paid bosses, collecting up to £55 million in cash and shares.

This is a phenomenal achievement for a company which barely existed four years ago but which has become one of the principal beneficiaries of the internet gaming boom.

In 2002 the company made £5 million from its poker website worldwide. This rose to £68 million in 2003 and £304 million in 2004. It will break this record in 2005, having made £115 million in the first three months of the year.

Now the flotation will value the group at $8 billion (£4.4 billion) to $10 billion, the biggest flotation since the £29 billion listing of Orange in 2001.

The company makes its money by charging customers a commission, know as rake, to play against each other on tables of up to ten players, or in tournaments.

Poker’s reputation as a pastime for bourbon-drinking, cigar-chomping middle-aged men has undergone a makeover in recent years. This has been partly because of the rise of television poker tournaments such as Late Night Poker, Celebrity Poker Club and World Poker Tour. Celebrity poker fans, such as Sarah Jessica Parker, from Sex and the City, and the use of Caprice, the model, to host televised games, have helped the game to shake off its sleazy image.

A recent survey claimed that 30 to 40 per cent of online gamblers in Britain are female, although PartyGaming said that its female traffic was only 10 per cent. This compares with 5 per cent of players at casinos and betting shops.

Nielsen//NetRatings,which measures internet traffic, said that PartyPoker.com has 159,000 users in the UK — 3.7 per cent of the traffic to gambling sites. There are 19 others which have more than 100,000 customers, the most popular of which are the National Lottery site, which has 1.7 million fans, and jackpotjoy, which has 558,000.

Almost 4.3 million Britons visited a gambling website in April, an increase of 300,000 on the same time last year.

About £4 million a day is bet on internet poker. The online boom is blamed for creating many of the 300,000 gambling addicts seeking help.

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