Posted on 10/01/2006 9:50:23 PM PDT by ellery
AMERICA’s $6 billion (£3.2 billion) internet gambling industry is facing meltdown after the US Senate pushed through a Bill at the weekend outlawing the processing of bets by banks and credit companies.
The surprise move, which is expected to spark a massive share sell-off, will prompt London-listed 888 Holdings to announce this morning that it is halting its entire US-facing operation, accounting for half its business.
PartyGaming, the world’s biggest internet gambling company, said last night that it was “still evaluating the situation”, although industry sources believe it will also announce a cessation of its services to American punters.
However Sportingbet, which was celebrating on Friday after a New York court released its former chairman, who had been facing gambling charges, will tell investors that it is still digesting the implications of the Bill.
Despite the Bill’s prescriptive nature, it excludes local online betting on horseracing, fantasy leagues and lotteries. It also has no impact on the hundreds of casinos and gambling emporia that dot America, ranging from the neon palaces of Las Vegas and Atlantic City to the riverboat casinos that ply their trade on the Mississippi.
One senior internet gambling executive said last night: “This is the worst form of protectionism I have ever seen. This will drive internet gambling underground and consumer protection will go out of the window. The religious groups that lobbied for this may live to regret it.”
The Unlawful Internet Gambling Enforcement Bill needs only to be signed by President Bush to become law. Legal sources predict that he will do so in the next two weeks, possibly as early as Wednesday.
The passing of the Bill in the early hours of Saturday surprised the industry. Although it had successfully negotiated Congress, its passage through the Senate looked likely to be blocked through lack of parliamentary time.
However, Bill Frist, the Republican leader in the Senate, got the measure through by attaching it to an unrelated Bill that enhances port security.
“Gambling is a serious addiction that undermines the family, dashes dreams and frays the fabric of society,” Dr Frist said. “The bottom line is simple: internet gambling is illegal. Although we can’t monitor every online gambler or regulate offshore gambling, we can police the financial institutions that disregard our laws.”
The ban may drive some small companies out of business, although big operators such as 888 and PartyGaming will highlight the strong prospects of their non-US business.
However, 888 is expected to warn its shareholders in a Stock Exchange statement this morning that its withdrawal from America will force it to pare back its cost base, resulting in a significant hit against this year’s profits.
Well, since they made some exemptions, I wonder if this is more about money than morals?
Thank you Big Nanny...
"We know far more about wasting money than you do! Do not question us!"-U.S. Congress
It must be taxed. If we can't tax it, then it must be illegal. We must have our cut of the profits."says Frist, as he jumps up-n-down.
OK, using that logic, why not shut down Las Vegas and Atlantic City, every Indian casino, every race track, every bingo hall, every state lottery, etc., as well? This has nothing to do with protecting against the supposed evils of gambling. It is really a misguided attempt to protect the turf of the established American gambling industry. This effort will ultimately fail, as did prohibition. Sanctimonious fools like Frist and Kyl should be embracing internet gambling, and should concentrate on regulation rather than abolition.
I doubt that any of our esteemed elected officials have ever placed a bet that could be considered outside of the law in their lives. /sarcasm off
Something else that Congress recently did was place a cap on the interest that can be charged on short term loans for military personel. I belive they capped it at 36% APR, while most "payday loan" companies have APRs of nearly 400%. What this is going to do is practically outlaw using payday loans by anyone in the military... This may be a good thing, or it could be bad, depending on the circumstances. Remember, capping the interest rate at 36% APR means that one of these stores would make $1.50 on a $100, two week loan. Not exactly a way for a business to stay in business.
Mark
Definition of gambling:
When the government runs it (i.e. the Lotery, or if they get enough of a cut, like with casinos), gambling is good for the chilrun...
When a private company runs it, it's a terrible thing, and needs to be outlawed (because the government isn't getting its cut)
Mark
What about just getting an overseas bank credit card?
Mark
I guess they couldn't find a way to tax it.
Yeah, like whitehouse.gov! lol
Mark
Exactly! The simple fact is that organized crime doesn't much care for competition, and it will use every weapon in its arsenal to defend its turf. And it doesn't matter if it's the US government or the mafia, they'll do what ever they can to eliminate the threat to their income.
Mark
Statement of
John G. Malcolm
Deputy Assistant Attorney General
http://www.usdoj.gov/criminal/cybercrime/Malcolmtestimony42903.htm
Criminal Division
United States Department of Justice
Before the Subcommittee on Crime, Terrorism, and Homeland Security Committee on the Judiciary United States House of Representatives
http://usinfo.state.gov/journals/itgic/0801/ijge/gj07.htm
Organized Crime and Cybercrime:
Synergies, Trends, and Responses
From The Hill Newspaper:
[Anti-terrorism Bill Includes Internet Gambling Provisions After the Financial Services Committee of the United States House of Representatives heard testimony from the Federal Bureau of Investigation that Internet gambling is vulnerable to terrorist financing schemes, the committee has included an amendment to anti-terrorism legislation that would bar Internet gambling sites access to United States financial services systems via the use of credit cards, wire transfers, and other bank instruments. Committee Chairman Mike Oxley (R-Ohio) said that he would introduce the manager’s amendment to his portion of the legislation, which includes measures related to fighting terrorism not expressly recommended by the 9/11 Commission, such as Internet gambling, Washington, D.C., newspaper The Hill reports. Sunday October 3, 2004]
Sick. Now there using the terrorist excuse.
Time for me to change to another party.
Fed up with the nanny state Reps and Dems
Gee, I wonder if Frist can do a midnight dance to get conservative judges on the 6th circuit court of appeals, currently blocked by my two communist senators. Naw, that's not important.
I still don't understand FReepers' support of online gambling. If you want to throw your money away, go to a "legal" establishment that's regulated.
I've suspected that online gambling rackets are run by spam gangs and other kinds of gangs, including those who support crime including terrorism. I do not doubt the onlinegambling/terrorism connection one bit.
Lets ban the Stock Market too. That is gambling just as much as poker is. Plus they make the stuff that supports terroism like backpacks.
The didn't bribe the right Senators.
I think they did. The casino industry, that is.
The stock market benefits from created wealth, poker doesn't. Poker is zero sum.
Casino gambling always gives a slight advantage to the house, so it's worse than zero sum.
Agreed.. but this sounds like it's more about protecting Vegas and the tribes.
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