04 October, 2006 - Published 10:31 GMT
Shares in online gambling companies have lost more than half of their value on the London Stock Exchange today, following a move by the United States Congress aimed at banning Internet betting. This report from Matthew Davies:
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While there have been moves to clamp down on Internet gambling in the United States for some time, this latest action by Congress was a little unexpected. The legislation was actually tacked onto an unrelated bill regarding security at American ports. All the bill needs to come into effect is the signature of President George Bush - and that's likely to happen within the next two weeks.
As a result, shares in some of the big companies involved in this sector have taken a significant battering, losing more than half of their value. The world's largest online casino, 888, has already suspended its operations in the US - and another company, PartyGaming says it'll follow suit once the bill is signed into law.
It's a huge blow for these companies - this is a six billion dollar a year market - PartyGaming generates as much as 78 percent of its revenues from the United States. For 888, the figure is around 50 percent. However, while the immediate future of these firms looks bleak, many experts say that the desire on the part of punters to gamble means that, in time, ways around these new laws will probably be found.
Basically, the law is designed to keep banks and credit card companies from doing any business with online casinos. Despite the fact that all of these casinos are actually located in other countries. I'm not sure how this will affect services like NETeller or eGold, which aren't really banks, and don't operate out of the US. (NETeller is in the Isle of Man.) And already many banks and credit card companies tread very lightly about working with online casinos - PayPal won't do it at all. So all this may mean is that I won't get any casino assignments for a while.. but I think it'll simmer down.
Now if only Congress would take so much action about fiscal issues that are actually IMPORTANT.. or let us have online gambling here so they can take the taxes from it, instead of letting it bleed off overseas.