Several Internet gambling companies, including PartyPoker and 888, will stop accepting wagers from Americans when President Bush signs into law a measure that forces banks and credit card companies to block transactions with online casinos. Many Internet gambling companies listed on the London Stock Exchange lost a considerable amount of their market value Monday.
"Online gambling companies seem to be falling into two camps," said Sue Schneider, CEO of River City Group, which provides consulting services to online gambling firms. "There are some that still have a wait-and-see approach and some that are bailing out immediately and saying we're not going to take any U.S. play, even though it's (the anti-gambling measure) not even gone into effect yet, which is a little amazing to me."
PartyPoker, the world's largest online poker network in terms of players and revenue, announced Monday that it will not accept U.S. play once the anti-online gambling measure becomes law. Parent company PartyGaming receives an estimated 78 percent of its $978 million in annual revenue from American players. The company's share price dropped 58 percent Monday.
"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," said PartyGaming in a statement issued Monday.
888 Holdings, parent company of Casino On Net, the world's largest online casino in terms of players and revenue, will also stop taking U.S. play. The company suffered a 26 percent loss in share value Monday. Two software providers, CryptoLogic and Boss Media, also announced Monday that the companies they provide games and systems to will no longer accept American play.
Legal experts say the legislation might not be effective in its goals and that savvy online gamers will still find ways to pay for gambling services.
"Regardless of what the Department of Treasury might come up with, it is likely that there will be a significant number of work-arounds on it, so there will still be an ability for players to make fund transfers," said gaming lawyer Tony Cabot.
PartyGaming and 888 Holdings are among a slew of online gaming companies that went public in 2004 and 2005. In doing so, the companies became more transparent and accountable to shareholders.
"I find it ironic that the standard-bearers for this industry are leaving and I think that's sad because these are a sampling of the most legitimate companies in any industry," said Cabot. "They are well-managed, well-regulated companies with good measures for consumer protection."
No privately-held online gambling companies have indicated any plans to withdraw from the American market.
"You can bet that private companies are going to continue to try to take advantage of this and will probably have their numbers soar if they can figure out how to keep moving the money," said Schneider.
"In an important sense, all that the legislation is doing is hurting legitimate public companies overseas and pushing further underground the industry that will meet the demand of the U.S. consumer," said Keith Furlong, deputy director of the Interactive Gaming Council, a non-profit trade association that promotes fair and honest online gambling.
"The position of the IGC hasn't changed," he said. "We are still advocating for government regulation as the only way to really truly protect consumers."
The U.S. is generally considered to be the largest market for online gambling in the world. Of the estimated $12 billion in annual revenue generated by the online gambling industry, more than 50 percent is thought to come from American gamblers.
"I hope that the American consumer voice is heard when the signing and enacting of this law comes and people are no longer able to fund their accounts and play poker -- which is as American as apple pie," said Furlong.
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