Video: Can Congress really stop online gambling?

updated 10/2/2006 8:25:38 PM ET 2006-10-03T00:25:38

Shares in British online gambling companies, including Sportingbet PLC and PartyGaming PLC, dived Monday after the U.S. 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.

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 commented that it was difficult to assess the value of online betting companies with heavy exposure in the United States 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.

Shares in PartyGaming plunged 56 percent to 48.83 pence (91 U.S. cents), shares in 888 sank 26 percent to 108.25 pence ($2.03), while Sportingbet shares dropped 64 percent to 66 pence ($1.24).

“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.”

Austrian-based Bwin.com Interactive Entertainment AG, which gets 22 percent of its revenue from the United States, said it was reviewing its options.

“It’s a difficult situation right now, and we need to have our lawyers take a close look, review the situation and what it could mean to us,” Bwin spokeswoman Karin Klein said in Vienna.

Bwin shares dropped 35 percent at 13.58 euros ($17.22).

The company betinternet.com PLC, which does 60 percent of its business in Asia, said it was suspending its business in the United States; it accounts for 0.2 percent of its active customers.

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.

Paddy Power, the Irish bookmaker, gets about half its revenue from online betting but “we have made every effort to block U.S. play,” said spokesman Breon Corcoran.

“We would be excited about bringing an Irish brand to the States, but given the climate there, it’s unlikely to happen,” Corcoran said.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.73%
$30K home equity loan FICO 5.26%
$75K home equity loan FICO 4.70%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.42%
13.42%
Cash Back Cards 17.94%
17.94%
Rewards Cards 17.14%
17.14%
Source: Bankrate.com