It appears that the Scheinberg family, the owners of the Internet gambling business PokerStars, is headed towards becoming the next Internet billionaire family.  The decision of Isai Scheinberg, founder of PokerStars, to sell the company is the reason for the soon to be billionaire status of the Scheinberg family.  PokerStars is a virtual poker operator second in size only to PartyGaming.  The four owners of PartyGaming, the company behind the PartyPoker.com website, pocketed about £1 billion last summer after floating PartyGaming on the London Stock Exchange with a value of £4.64 billion.

PartyGaming’s flotation was the largest and most headline-making stock market listing of the year. It propelled the company into the FTSE 100 index of Britain’s largest companies and thrust Ruth Parasol, PartyGaming’s founder and former Internet porn millionaire, into the limelight.
In contrast to Parasol’s somewhat dubious background, Isai Scheinberg, has a more conventional background for an Internet entrepreneur, having worked as a senior programmer for IBM, the US computer group. According to most accounts, Mr. Scheinberg and his family own about 75 per cent of PokerStars. The employees own most of the other 25 per cent.

After relocating the PokerStars operation to the Isle of Man, the Scheinbergs appointed NM Rothschild, the City merchant bank, to sell or float PokerStars.  The price for PokerStars is listed at more than $2 billion (£1.2 billion).

PokerStars derives much of its business from residents in the U.S., as does PartyGaming.  Because online gambling is illegal in the U.S., owners and directors of websites that accept wagers from players based in the U.S. could technically be imprisoned if they enter the country.  This is yet to happen, however, as in practice they have been allowed free access.

While it is possible that PokerStars will float on the London Stock Exchange by the middle of this year, City analysts believe the huge growth in Internet gambling is likely to make PokerStars attractive to both virtual and physical rivals.

Another possibility would be a merger with 888 Holdings.  Like PartyGaming, 888 Holdings floated on the London Stock Exchange last year (for £600 million).  And, like PokerStars 888 Holdings is controlled by Israeli interests.
Some City analysts are of also of the opinion that the sale of PokerStars could attract interest from traditional gambling companies, such as Rank Group and William Hill, companies that are eager to boost their presence in the online sector.

Posted on: January 8, 2006

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