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Online Poker News for U.S. Citizens (The
Ban)
Online
gaming in crisis over U.S. ban
Mon Oct 2, 2006 10:24 AM ET
By Pete Harrison
LONDON (Reuters) - Online gambling firms faced their biggest-ever
crisis on Monday after U.S. Congress passed legislation to end
Internet gaming there, threatening jobs and wiping 3.5 billion
pounds ($6.5 billion) off company values.
Britain's PartyGaming Plc, operator of leading Internet poker site
PartyPoker.com, and rivals Sportingbet and 888 Plc said they would
likely pull out of the United States, their biggest source of
revenue.
"This development is a significant setback for our company, our
shareholders, our players and our industry," PartyGaming Chief
Executive Mitch Garber said.
The House of Representatives and Senate unexpectedly approved a bill
early on Saturday that would make it illegal for banks and
credit-card companies to make payments to online gambling sites.
The measure was sent to President George W. Bush to sign into law,
which most analysts see as a certainty.
"We believe that this will have a very material impact on the
long-term prospects of online gambling, and in particular poker,"
said analyst Julian Easthope at UBS. "This will lead to a rapid
decline in the use of online poker sites."
PartyGaming generates about 78 percent of its revenue from the
United States, while Sportingbet gets about 62 percent there.
CRACKDOWN
Shares in PartyGaming, which rakes in nearly $4 million a day from
its 19 million customers, fell 57 percent by 1155 GMT.
Sportingbet, which owns sportsbook.com and ParadisePoker.com, lost
60 percent, 888 was down 33 percent and Austria's bwin.com fell 24
percent.
Bwin could be pushed to the brink, having paid heavily for Swedish
online poker site Ongame earlier this year to gain access to the
U.S. market, said Leopold Salcher, an analyst at Austria's RCB.
"This could break their neck," he said.
Online gaming exploded in 2005 with a string of high-profile company
flotations in London, which has become the industry's corporate
center.
The bulk of revenue has always come from U.S. players, but the firms
were located in offshore jurisdictions like Costa Rica and Antigua
for fear of prosecution in the United States, where the legal status
of online gaming and betting was uncertain.
Shares in Sportingbet and BETonSPORTS had already been hammered
after recent arrests of senior executives on charges of illegal
gambling in individual U.S. states, but investors remained hopeful
online betting and gaming would not be completely banned at a
federal level.
Meanwhile, big American corporations like Las Vegas-based Harrah's
Entertainment Inc. were forced to sit on the sidelines as gaming
money streamed out of the country.
PartyGaming said in a statement, "If the President signs the act
into law, the company will suspend all real money gaming business
with U.S. residents."
"Any such suspension would also result in the group's financial
performance falling significantly short of consensus forecasts for
2006 and 2007," it added.
MERGER SCRAPPED
Stephen Whittaker, joint chief investment officer at Britain's New
Star Asset Management, said the likely ban could be challenged.
"This represents protectionism, and the WTO have said you can't do
that," said Whittaker, whose portfolio includes about 2 percent of
online gaming stocks. "Overall, we'll probably remain with most of
our holdings."
"We'll probably reduce one, maybe two," he added. "We want to let
the dust settle a bit -- it will take a few days."
Sportingbet said a ban would hit trading and it would scrap a
planned merger with World Gaming as a result.
888 Plc said the move would hit its results, as did gaming software
provider Playtech, whose shares fell 42 percent.
But Paul Leyland at Arbuthnot Securities said Playtech was
relatively well positioned. "The only company for which you could
categorically say that redeployment is easy is Playtech," he said.
"But for the others it's much more difficult."
A ban would also hit payment processors such as Neteller Plc and
Optimal Group's FireOne subsidiary.
(Additional reporting by Laurence Fletcher in London and Alexandra
Schwarz in Vienna)
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Some personal
notes I'd like to add... First of all I am sure that online poker in
the U.S. is not gone, it is just temporarily in a fog. This
multi-billion dollar market will not fall so quickly, methods will
come up on how to get around this bill when depositing into poker
sites. Lets look at what this bill does...
-
This bill attempts to kill off all methods of depositing
-
This bill does not make online poker illegal
-
This bill does not make cash outs illegal
-
Deposits have always been kind of a PITA
- Not
all the sites are pulling out of the U.S. market
- New
deposit methods will pop up. It's too big of an industry to
leave all the U.S. money on the table. There will be plenty of
rooms willing to thumb their nose at the U.S.
Like I
said playing online poker is not illegal, just depositing money into
these sites are illegal. There will eventually be a method to come
out so we can get around this ridiculous bill, so sit tight. Please
send letters to your government officials if you live in the U.S.
Don't give
up on Online Poker!!! |
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