Offshore gambling companies in panic mode as U.S. bill clears first hurdle

Offshore gambling companies in panic mode as U.S. bill clears first hurdle

	Published : Sat, 18 Mar 2006 02:05 By : Amy Watts Print this Story

LONDON: The U.S. appears to be determined to stamp out online gambling in the country as the House of Representatives Committee on Financial Services approved a bill aimed at banning the use of credit cards, cheques and electronic fund transfers for online gaming.

Currently, online gambling companies are banned from operating in the U.S., but the law is rather blurred on firms based outside the country.

The bill is one among three anti-online gambling initiatives. It was introduced by Jim Leach envisaging banks and credit card companies to block money transfers going to offshore gambling sites. The bill will have to pass a second committee before it is presented in the Senate.

Shares of U.K.-based online gambling companies dipped Thursday after the news. London Stock Exchange-listed shares of PartyGaming, 888 Holdings and Sportingbet, all of which have large betting clientele in the U.S., were down as much as 9 per cent.

888's chief executive John Anderson hoped the initiators of the bill will find it too difficult to push through. He admitted the company's share of its U.S. business, which is now 55 per cent, will get reduced to 20 to 25 per cent.

Anderson's comments came after the company announced its maiden results, posting 60 per cent increase in pre-tax profits to $65 million as the number of players of casino games increased 28 per cent to 4.1 million and poker players more than doubled to 1.5 million.

There is another bill moved by Republican senator Bob Goodlatte, proposing to amend the U.S. Wire Act to include internet gaming in the ambit of the current provisions, which make gambling over telephones illegal.

Anderson believes online gaming does not breach any laws but online sports bets do. He said as long as "we are vigilant on the lobbying, we will be all right. We have always been quite hot on the lobbying."

Both 888 and PartyGaming are members of the Interactive Gaming Council, a Vancouver-based lobby group, which described the bill as "tilting at windmills". Sportingbet, which offers sports bets and poker, has engaged a Washington lobby group, Patton Boggs.

It is estimated that 12.5 million Americans bet online.

A PartyGaming spokesman said: "All previous attempts have failed but we are not going to be complacent." The company sent a note to analysts saying Leach's bill has crossed only the first of five hurdles. The next one is the judiciary committee in the House of Representatives "where bills like this have had difficulty in the past".