The House of Representatives and the Senate have approved a bill banning online gambling. Under the bill, banks and credit card companies are prohibited from making payments to Net gambling websites. On Friday, negotiators from the Republican-led House and Senate reached a deal on the legislation and attached it to unrelated legislation to bolster port security, which Congress approved.
“It’s been over 10 years in the making. The enforcement provisions provided by this bill will go a long way to stop these illegal online operations,” says Republican Sen. Jon Kyl, a longtime champion of the bill.
Online gaming companies have taken severe financial hits due to the measure. Canadian gambling software company CryptoLogic Inc. saw nearly 20 percent of its share value wiped out in hours after Congress approved the bill; Excapsa Software Inc., a Toronto-based maker of software for gambling sites, saw its shares slide 66 percent; and Chartwell Technology Inc. of Calgary, which makes gaming software systems, lost 15 percent of its value.
In Britain, where many Internet gambling companies trade, the top three companies announced they were completely pulling out of the U.S. after the government crackdown.
Operator of online poker site PartyPoker.com, PartyGaming PLC, and SportingBet PLC—as well as 888 PLC—say they have no choice but to leave the U.S. even though American gamblers are their largest source of revenue.
“This development is a significant setback for our company, our shareholders, our players, and our industry,” says Mitch Ganer, chief executive of PartyGaming, which will suspend betting for its 900,000 U.S. players.
Shares in PartyGaming fell 56 percent, shares in 888 sank 26 percent, and SportingBet shares dropped 64 percent.
“The precise effect of the legislation is unclear,” 888 Holdings says in a statement. “However, this legislation indicates congressional intent to treat Internet gaming, whether sports related or not, as illegal.”
