Experts: Ban Won't Stop Online Gambling

David Carruthers, the former chief executive of online gambling company BetOnSports leaves the federal courthouse in St. Louis followed by his attorney Scott Rosenblum in this, Aug. 16, 2006, file photo. Carruthers faces 22 counts of fraud and racketeering charges and remains under house arrest in the St. Louis area. (AP Photo/James A. Finley, file) (James A. Finley - AP)

PartyGaming PLC, once the envy of online gambling with its more than $8 billion IPO in 2005, is now trying to figure out how to save its business model. It runs what was once the world's biggest poker site, PartyPoker, and has said it will no longer take payments from the U.S., eliminating nearly 80 percent of its revenue and sending its stock plunging.

Another poker company, 888 Holdings PLC, also said it would stop taking U.S. bets, ensuring its profits will fall dramatically.

Sportingbet and Leisure & Gaming both sold their U.S. operations for a dollar. Sportingbet said its exit from the U.S. market cost it nearly $400 million.

The bleeding didn't stop there. Neteller and FireOne, which owns e-wallet FirePay, also saw their stock price plummet. On Oct. 2, FirePay announced it had stopped doing business with sites that might take U.S. bets, including PokerStars. The decision forced PokerStars, now the biggest poker site in the world and a registered business in Costa Rica, to rely on Neteller to take money for bets headed to its site.

"There are privately owned operators that will continue to take play as long as they have payment processors that will work with them," said Sue Schneider, publisher of the online gaming magazine Interactive Gaming News. "I think the big question is whether the volume remains the same. But I don't think any of this means there will be less people playing on the Internet."

Neteller has said it is evaluating the law. If Neteller abandons PokerStars and other sites, their bottom lines, no doubt, will be hit hard.

But so far, Neteller's decision to work with PokerStars has amounted to good news for sites not afraid of scorning U.S. law.

Experts say while the new law has forced the public companies out of U.S. market, it has left poker players and bettors gravitating toward private companies.

Both PokerStars and FullTilt have already seen traffic on their Web sites surge, taking advantage of any short-term gain now that some of the competition has been sidelined. On its Web site recently, FullTilt boasted: "We're Here to Stay!" and offered bonuses to sign up.

This isn't the first time the industry has faced a serious setback. In 2001, Visa and MasterCard and other merchant banks stopped allowing money to be sent to Internet gambling sites.

Like then, Sinclair thinks Internet gambling will recover again. It's simply too lucrative.

"There will be a big hit to the industry," Sinclair said. "A big hit. But it's not going to be long term, it's transitory until somebody finds a solution to whatever roadblocks are put in their way. There's too much money for it to go away."

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Associated Press Writer Jane Wardell in London contributed to this report.