Betfair prepares to take a £1.5bn gamble on stock market float

• Betfair brings gamblers together online Picture: PA

The group would be one of the biggest stock market debuts so far this year, but it is understood the firm and its advisers have still to decide on the vital issue as to how the float would be priced.

Online grocery business Ocado has seen its shares dive since its controversial flotation at 180p-a-share earlier this year, when the City felt its 1bn-plus flotation value was overpriced given its patchy trading record.

Betfair, set up by a former City trader and a former professional gambler, is said to be likely to press the button with an announcement of an initial public offering (IPO) within a fortnight.

However, sources said there was also still a chance the stock market listing could be postponed. Scottish Resources Group, the coal mining business, pulled its 250 million float in July due to what it called challenging markets.

Analysts said if the flotation of Betfair goes ahead, the group, where founders Ed Wray and Andrew Black own a combined 25 per cent, could earn a place in the FTSE 250 index.

The company, which is being advised by Goldman Sachs and Morgan Stanley, was launched 11 years ago by Wray and Black. Japanese bank Softbank is understood to be the next biggest shareholder with a 23 per cent stake, which it acquired for some 355m in 2006.

The rest of the equity is thought to be owned by the group's management, including chief executive David Yu, and the firm's staff, as well as a number of private investors who backed the business in its early days.

A Betfair spokeswoman declined to comment. The firm is said to have considered a listing before, but plans were put on hold in 2005 as it reportedly wanted to wait until after the 2006 World Cup, which is always a major earner event for gaming firms.

Betfair claims it is Europe's largest online sports betting operator, with 2.5 million registered users. It acts as a betting exchange, matching individual betters to each other. Users can choose the odds at which they want to place a bet, while they can also bet both that an outcome will happen and that it will not happen.

The group is licensed to operate in the UK, Australia, Malta, Italy, Austria and Germany, and is understood to be keen to expand further overseas. Analysts said as well as crystallising the value of some of the existing shareholders' stakes, a float could also provide a warchest for foreign expansion.

Last year, Betfair acquired TVG, a US television channel that shows horse racing, for 35m.Betfair's latest annual results show the group grew underlying earnings by 29 per cent to 72m in the year to end-April 2009 on turnover of over 300m.

Betfair is also said to want to use its specialist technology, which matches two betters online, beyond its core gambling service. It is shortly to launch a share trading platform, called LMAX, which will use the same software.