The online betting group Sportingbet today said it was holding takeover talks for the recently listed internet gaming services firm Empire Online.
Sportingbet said the talks were at a very early stage and there was no guarantee they would lead to an offer.
"The making of any offer is subject to the satisfaction of certain material preconditions and completion of appropriate due diligence," Sportingbet said in a statement.
Empire last week said it had received a £790m bid approach, but declined to name its suitor.
Speculation initially focused on firms such as PartyGaming or 888.com.
Empire Online floated at 175p a share in June and stock in the firm closed on Friday at 264p, making the business worth £773m. Empire, which operates as a "skin", or white-label, poker and casino site, is the most successful of this new breed of online gambling companies.
In effect a marketing business, Empire recruits online gamblers and then directs them to third-party websites such as Party Poker, owned by PartyGaming, and 888.com, where the poker and casino games are actually played.
Empire's rise has demonstrated that successful online gambling companies need virtually no assets to succeed. The company has achieved an estimated 9% share of the global online poker market without owning any proprietary software.
Empire makes its money by claiming commission from the host operators. In some cases, this commission is thought to be over half the revenue generated by individual players. Payments from PartyGaming represent two-thirds of its revenue.
Sportingbet's interest in Empire, which was founded by the Israeli businessman Noam Lanir in 1998, underlines the current infatuation with online gaming.
In June, Partygaming floated its shares on the London Stock Exchange and now has a market value of £6.2bn, and last week Cassava Enterprises, the owner of 888.com, said it hoped to list its shares by the end of September.
Should Sportingbet take over Empire, the combined firm could pose a competitive threat to PartyGaming. Empire and PartyGaming have enjoyed a strong working relationship, but Empire's proposed purchase of Noble Poker, which hosts games directly, had threatened to disrupt the partnership.
