Online Gambling Goes Bust in the U.S.
After the House of Representatives and the Senate approved the Safe Port Act on Saturday, a bill that includes the barring of U.S. banks and credit card companies from making payments to online gambling sites, the industry all but waved their white flags, even before the President approved it.
PartyGaming Plc, which operates PartyPoker.com, along with Sportingbet and 888 Plc indicated that they would end their operations in the U.S., their largest source of revenue, once the president endorsed the bill.
About 78% of PartyGaming’s revenue has been derived from the U.S., while about 62% of Sportingbet’s revenue came from its operations in the U.S.
This event will be nothing short of disastrous for the online gambling industry, which stands to lose up to $6.5 billion, or more than half of its value.
“This development is a significant setback for our company, our shareholders, our players and our industry,” said Mitch Garber, Chief Executive of PartyGaming. “We are disappointed that the popularity and skill of poker in particular have not…been specifically protected.”
UBS analyst Julian Easthope added that “this will have a very material impact on the long-term prospects of online gambling, and in particular poker. This will lead to a rapid decline in the use of online poker sites.”
The approval of this bill was somewhat unexpected, since similar pushes for the banning of online gambling in the U.S. were thwarted at least three times before.
A recent report released by Nielsen//NetRatings showed that three of the top 10 stickiest brands at home and work in August of 2006 in the U.S. were online poker sites.
Shares of online gambling companies from around the world tumbled since the announcement.
Sources:
http://www.redherring.com/Article.aspx?a=18906&hed=Snake+
Eyes+for+Online+Gambling
http://news.yahoo.com/s/nm/20061002/bs_nm/leisure_
partygaming_dc;_ylt=AhfvB9aHsipgDtQLERa.8pIDW7oF;_
ylu=X3oDMTBhZDhxNDFzBHNlYwNtZW5ld3M-
http://www.clickz.com/showPage.html?page=3623509
