PokerStars has announced its relocation to the Isle of Man, a move that speculators agree precedes a possible IPO on the London Stock Exchange (LSE).
The world's second largest online poker company, PokerStars has attained a gaming license from the jurisdiction of the Isle of Man, and will permanently transfer its operations to the island later this year.
The island's location is attractive to Internet gaming companies as it affords them the ability to expand into the European market from a local base, and has recently approved a new law which will ban corporation tax as of April 2006. Furthermore, in January 2005 the jurisdiction legalized casino and poker bets made by American players on gaming sites whose servers are based on the island (the United States has yet to approve Internet gambling as a legal pastime).
All of these factors have contributed to PokerStars' decision to uproot its operations from Costa Rica to the Isle of Man. In addition, it is has been suggested that a move to a locale which boasts strong financial and risk controls can assist companies in gaining support from the government and other sources of funding, which are necessary in order to float an IPO on the Stock Exchange. Indeed, if Poker Stars were to pursue a floatation on the LSE, it would result in a widespread increase of the site's exposure across the globe. The company currently has a market share of approximately 10%.
Since PartyGaming's highly successful float this past June, a number of Internet gaming companies are rumored to be considering a float on the LSE, including Betfair and Cassava Enterprises, which owns 888.com.