Online Gaming in Crisis

Shares in online gaming stocks lost more than half their value this morning after U.S. Congress approved a bill to ban Internet gambling.

In a Congressional back room deal, opponents of Internet gambling have added language to port security legislation that would prohibit online wagering. The port security bill with the Internet gambling prohibition language included was approved by the U.S. House and Senate late on Friday evening and will be sent to the President to be signed into law.

“This last minute deal reeks of political gamesmanship. The American people should be outraged that Congress has hi-jacked a vital security bill with a poker prohibition that nearly three fourths of the country opposes,” said Michael Bolcerek, president of the Poker Players Alliance.

Some UK based internet gambling companies, including PartyGaming and SportingBet Plc, said they would likely pull out of the United States, which some insiders estimate makes up over 70% of online gambling revenue.

PartyGaming released a statement today that included the following:

“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. As a result of this development, the Board of PartyGaming has determined that if the President signs the Act into law, the Company will suspend all real money gaming business with US residents, and such suspension will continue indefinitely, subject to clarification of the interpretation and enforcement of US law and the impact on financial institutions of this and other related legislation.”

News of the withdrawal from the US market hit stock prices hard this morning. PartyGaming plummeted 60% in early trade, 888 Plc plunged 45%, Sportingbet lost 65% and online money transfer firm Neteller lost 60%. All together, the online gambling industry lost about half it’s value today on the UK market, somewhere in the region of $6.5 billion.

“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.”

This is the biggest crisis in the brief history of online poker, and Bluff Magazine will keep you updated as this major story develops.

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