Online Gaming Shares Plummet in Bill's Wake
Biggest Site Threatens To Pull Out of U.S.
Tuesday, October 3, 2006; Page D05
LONDON, Oct. 2 -- Shares in British online gambling companies dived Monday after Congress passed legislation prohibiting the use of credit cards, checks and electronic fund transfers for online gaming.
PartyGaming, the world's biggest online gambling company, said it would pull out of the United States if President Bush signs the legislation into law.
The company 888 Holdings PLC said it is suspending online betting operations in the United States as a result, and Sportingbet PLC said it called off takeover talks with World Gaming PLC.
The legislation was part of a port securities bill passed by the House and Senate on Saturday.
Shares in PartyGaming plunged 58 percent yesterday to end at 84 cents, shares in 888 sank 26.1 percent to finish at $2.03, while Sportingbet shares dropped 64.5 percent to close at $1.24.
The companies hit hardest by the ruling are those that offer betting markets denominated in U.S. dollars and usually operate from bases in the Caribbean or Central America. Most of the big British and Irish sites, by contrast, keep their operations in Europe and take deposits only off credit cards denominated in pounds and euros.
Investec Private Bank said it was difficult to assess the value of online betting companies with heavy U.S. exposure because the allocation of costs is unclear.
Sportingbet, which does more than 60 percent of its business in the United States, said the impact of the legislation was unclear. However, the company called off talks about a potential bid for World Gaming.
"The precise effect of the legislation is unclear," 888 Holdings said in a statement. "However, this legislation indicates congressional intent to treat Internet gaming, whether sports-related or not, as illegal."
The legislation, if enacted, "will make it practically impossible to provide U.S. residents with access to its real money poker and other real money gaming sites," PartyGaming said. "If the president signs the act into law, the company will suspend all real money gaming business with U.S. residents."
William Hill PLC, one of Britain's biggest bookmakers, announced on Sept. 27 that it would cease accepting casino and poker business from clients with a U.S. address or a credit card issued in the United States.
