Posted on 10/02/2006 3:49:38 PM PDT by Alterboy1964
£4bn wiped off value of online gambling shares after US law change
Around £4 billion was wiped off the value of online gaming stocks today after a controversial move to prevent internet gambling in the United States.
Shares in the sector tumbled by as much as 80 per cent as investors reacted with dismay to new laws in the US which ban banks and credit card companies from processing payments to online casinos.
The legislation was a major blow for firms such as Party Poker owner PartyGaming and 888 Holdings, which rely heavily on the US for business.
The two companies said today that they will suspend business in the US indefinitely once President George Bush signs the Bill into law - a move expected within two weeks.
Shares in PartyGaming tumbled 61 per cent while 888 was down 45 per cent and Sportingbet was off 70 per cent. World Gaming plummeted 80 per cent after it was also hit by the end of takeover talks with Sportingbet, and online money transfer company Neteller fell 60 oer cent.
The Unlawful Internet Gambling Enforcement Act effectively stops anyone in the US from placing bets on the internet even if the casino is based overseas, although it does not include horseracing and state-owned lotteries.
Online gaming firms have been under pressure all year from the threat of harsh legislation in the US, although most analysts thought Congress would not have time to approve the Bill.
However, the measures were attached at the last minute to an unrelated Bill aimed at enhancing port security, which was passed on Saturday.
It followed the recent arrests of BetonSports chief executive David Carruthers and Sportingbet chairman Peter Dicks in the US over alleged illegal internet gambling on sport under current laws.
888 said today that the new law would treat internet gaming, "whether sports-related or not, as illegal".
"In the light of these considerations the board has concluded that it is appropriate to suspend participation by US-based customers in activities covered by the legislation," 888 said.
"The company will implement this suspension immediately upon the legislation taking effect and the suspension will continue for so long as the legal situation remains the same.
"The board will continue to seek clarification of the overall US legal position to determine whether and to what extent if any resumption of participation by US customers is feasible."
Last month 888 revealed that 52 per cent of its revenues came from the US, while PartyGaming has around 75 per cent of its business in America.
PartyGaming also said it would halt operations in the US "indefinitely" once the Bill becomes law.
Chief executive Mitch Garber said: "This development is a significant setback for our company, our shareholders, our players and our industry."
Sportingbet said it was "disappointed" by the decision in Congress to back the Bill, which it said would have "a material impact" on trading. Sportingbet, which generates 62 per cent of its income in the US, also pulled out of talks to buy rival firm World Gaming because of the new law.
Not only are many other large gambling websites expected to close their doors to American citizens, but the unexpected timing of the bill passed as part of the Port Security Bill late Friday night, helped to wipe out nearly $7.5 billion in equity in these so-called companies. This will not only greatly reduce their ability to solicit new customers, but will make it difficult for them to even operate financially.
Hats off to Bill Frist, John Kyl, Jim Leach and others for finally getting this much-needed legislation through Congress. I think Frist will make an excellent candidate for President in 2008 and I am hoping that we can look forward to more family-friendly legislation of this type once he is elected.
Gambling issues aside...there has been a tremendous amount of fraud associated with these websites...
have you read any of the other threads over the last two days? Most people here are incensed over this.
Big win for whom?
Not for those who advocate small and less intrusive government.
That's assuming you enjoy seeing the government control what you see and do online.
I can't log on to pokerstars.net this evening. Is this why?
Welcome to Free Republic. Frist ain't running for President. If he does, he goes nowhere. ibtz?
Whatever man.
Wlecome to FR.
I think attaching crap last minute to legislation is BS. It is spineless and underhanded.
If Americans would support this then they should have passed it as a separate bill. Which in my opinion they should do with everything.
3 weeks off for Easter, who knows what for Christmas.
Lazy, underhanded, lazy tactics.
Our new FReeper Alterboy started those threads!
Given his one track posting, I'm beginning to wonder if he's an AlterTroll.
a total and complete cave-in to the indian casino contributors.
hopefully these companies will find some way to move their operations offshore and other ways to move money into/out of players accounts.
Big win for your local casino & state coffers.
Alterboy1964
Since Sep 30, 2006
What is that smell??
Bull. Anything that leads to a much smaller govt. is the only "family friendly legislation" many of us want to see.
You haven't been zotted yet?
Well, I'll give you a 3 for flying under the radar.
Frist has about as much chance of being president - as I do.
I'd like to online gamble $5 that you are actually Bill Frist...
It's at the point where to vote for most Republicans I have to hold my nose, grit my teeth, and chant "War on Terror" to myself. I'm not sure how long that's going to last. It would help if these jokers would at least slow down on creating reasons not to vote for them.
It's at least a good thing I saw this article on FR so I can cash out my account. I wouldn't be surprised if there's a provision in this bill for the feds to confiscate any unclaimed accounts to spend on vital stuff like bridges to nowhere or drugs for the richest segment of the population.
A lot of sites announced they were going to shut down, but most said it would be after the bill was signed. I don't know about that one in particular. It may have high server traffick, what with people trying to withdraw their money all at once.
He posted some of the threads
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