Online gambling company Cassava Enterprises plans to float in London creating a $1.26-billion company, according to reports published Wednesday.

The planned IPO signals that the online gambling industry is cashing in its chips, although Gibraltar-based Cassava is valued slightly lower than several online gambling companies that have gone public recently.

Cassava runs “888.com,” which is one of the most popular online gambling sites in the world, along with other web sites like PacificPoker.com and ReefClubCasino.com.

Citing sources close to the company, Reuters reported Cassava was leaning toward an IPO in the next month. The Financial Times, also citing anonymous sources, said the offering will be on September 1.

Two Israeli families control the company—Avi and Aharon Shaked own 70 percent, and the Ben-Yitzhak family owns about 23 percent. British bank HSBC will manage the deal.

Whether Cassava’s plans are for the London Stock Exchange or London’s Alternative Investment Market is unknown. Cassava could not be reached for comment.

eGambling Looks to London

London’s public market is the home for online gambling IPOs because online betting, poker, and casino games are legal and regulated in Britain.

Unlike the United States, which prohibits online gambling, Britain looks to grow the market and turn London into a sort of Silicon Valley of the online gambling world. The irony is that most of the customers are American.

On June 27, Gibraltar-based Party Gaming, the company that owns PartyPoker.com, jumped onto the London Stock Exchange with a value of $9 billion. Securing a spot in the prestigious FTSE 100 index of the United Kingdom’s top companies, the company’s IPO was the largest on the LSE in five years.

In late 2001, Sportingbet floated on London’s Alternative Investment Market. The company’s stock soared in October 2004 after the company purchased Costa Rica-based ParadisePoker.com for $297 million.

Companies that power online gambling sites are also winning big in London’s public markets. Toronto-based CryptoLogic, which sells casino software, is listed on the London Stock Exchange. The company recently reported first-quarter earnings of about $5 million on revenue of $20 million, showing a 27 percent earnings growth over the previous year.

Trouble in ePoker Paradise

But analysts say the high-profile public moves could create an online gambling bubble that overlooks serious concerns for the industry.

Party Gaming was originally priced at 116 pence ($2.12) per share, and the company’s shares recently traded as high as 176 pence ($3.15) per share. The stock has a lofty price-earnings ratio of 67, despite the risk attached to depending on an American clientele that can’t gamble online without breaking U.S. laws. Party Gaming, for example, estimates that 90 percent of its customers are American.

If U.S. law turns further against online gambling companies, they could face restrictive hurdles or legal cases brought on by the U.S. Justice Department. The irony looms large for the companies largely based offshore in tax havens like Gibraltar and Antigua. Companies are looking for legitimacy and big paybacks through public plays, but are not fully transparent due to their offshore locations.