Gala Group, the bingo and casino business, said its hopes of floating the business had been boosted by the success of PartyGaming, the online gambling company that made its £4.6bn market debut this week.

Neil Goulden, the chief executive of Gala, said PartyGaming's spectacular success had lifted its prospects of listing the company by the end of the year. "We are heartened by the view the markets have taken on the gambling sector," he said. "Six weeks ago, I would not have been so sure. But it is very pleasing that the market is showing such a strong appetite for gambling stocks. It will help inform our decision [on whether to float]."

PartyGaming was valued at £4.6bn on flotation, putting it among Britain's blue-chip companies in the FTSE 100. Its road to flotation was dogged by fears over the uncertainty of online gambling regulation, and the company was forced to cut back its valuation to secure support. But since floating at 116p, its shares have shot up nearly 30 per cent to 149.5p.

Mr Goulden said Gala was still evaluating its options, but a float was possible in six months. Analysts reckon it could be worth £2bn and would get a good reception in the City.

James Wheatcroft, an analyst at Investec Securities, said: "Gala's bingo clubs have been performing very well and the company can boast a consistently strong performance."

He said Gala will benefit from the newly passed Gambling Act, which has scrapped the rule that insists customers must join a casino 24 hours before the are entitled to play. "Deregulation will drive more footfall to their venues and will be a decent catalyst for investors to take interest in," Mr Wheatcroft said.

A float would net Gala's chairman, John Kelly, a significant windfall. He led the £1.2bn buyout of the group in March 2003 from CSFB Private Equity and PPM Ventures. Now majority owned by Cinven and Candover, it is the UK's biggest bingo operator, with 167 sites. It also owns 28 casinos. Revenues rose 18 per cent to £544m in 2004 and the company said this year it had already repaid half of the £550m of debt invested by Cinven and Candover, less than two years after their takeover.

Merrill Lynch, UBS and Deutsche Bank have been reviewing Gala's business for the past two months.

Mr Goulden's comments came as Gala announced it had bought the New Generation Bingo Club in Basingstoke, Hampshire, for £18m - its biggest investment in a single bingo venue.