Bad news from US

$7 billion was wiped off the value of online gambling shares yesterday, 2 October, as the sector scrambles to come up with coherent strategies in the face of tweaks to US legislation which effectively ban US punters from placing bets online.

‘The Safe Port Act’ has been passed by Congress with an overwhelming majority of 409-2, and contains elements that deal with the ‘Unlawful Internet Gambling Enforcement Act of 2006’ that will affect the processing of payments between US customers and online gaming companies.

The Act is expected to be signed by President Bush in the next couple of weeks, and it will then be illegal for internet gambling businesses to accept payment from US players.

888.com, one of the industry’s heavy hitters are set to annouce supsension of their US business, following a similar decision by UK bookie and poker operator William Hill last week.

The development is part of an ongoing crackdown taking place in the US which has seen warrants issued for the arrest of gaming executives, with detentions actually being made on various charges including ‘gambling by computer’.

The impact on the poker operators, who rely so heavily on US business will be significant and a statement to The City from giant PartyGaming, probably the biggest company involved, reads:

“After taking extensive legal advice, the Board of PartyGaming Plc has concluded that the new legislation, if signed into law, will make it practically impossible to provide US residents with access to its real money poker and other real money gaming sites.”

“As a result of this development, the Board of PartyGaming has determined that if the President signs the Act into law, the Company will suspend all real money gaming business with US residents, and such suspension will continue indefinitely, subject to clarification of the interpretation and enforcement of US law and the impact on financial institutions of this and other related legislation.”

Mitch Garber, Chief Executive Officer of PartyGaming, said: "This development is a significant setback for our company, our shareholders, our players and our industry. While US horse race betting, state lotteries, fantasy contests and certain other online gaming activities have been exclusively protected under the new law, we are disappointed that the popularity and skill of poker in particular have not also been specifically protected.”

“The Board respects the laws of the US Government, and will continue to analyse their applicability, but also continues to believe that a regulatory framework for online gaming, including poker and casino gaming is the only sustainable long term solution.”

Dark days indeed for US punters, who are being urged by the pro-poker lobby to take a stand, enter the democratic process, and vote out their representatives who have pushed this Bill, which some see as an infringement of civil liberties, through.