Pacific Poker (888.com owned) axing US customers, PartyPoker may be next

[fitchjr1]

Hope this is the right way to post an article. Seems most likely most publicly traded sites are going to react in this sense.



Gambling online faces collapse in US after Senate ban
By Dominic Walsh

AMERICA’s $6 billion (£3.2 billion) internet gambling industry is facing meltdown after the US Senate pushed through a Bill at the weekend outlawing the processing of bets by banks and credit companies.

The surprise move, which is expected to spark a massive share sell-off, will prompt London-listed 888 Holdings to announce this morning that it is halting its entire US-facing operation, accounting for half its business.

PartyGaming, the world’s biggest internet gambling company, said last night that it was “still evaluating the situation”, although industry sources believe it will also announce a cessation of its services to American punters.

However Sportingbet, which was celebrating on Friday after a New York court released its former chairman, who had been facing gambling charges, will tell investors that it is still digesting the implications of the Bill.

Despite the Bill’s prescriptive nature, it excludes local online betting on horseracing, fantasy leagues and lotteries. It also has no impact on the hundreds of casinos and gambling emporia that dot America, ranging from the neon palaces of Las Vegas and Atlantic City to the riverboat casinos that ply their trade on the Mississippi.

One senior internet gambling executive said last night: “This is the worst form of protectionism I have ever seen. This will drive internet gambling underground and consumer protection will go out of the window. The religious groups that lobbied for this may live to regret it.”

The Unlawful Internet Gambling Enforcement Bill needs only to be signed by President Bush to become law. Legal sources predict that he will do so in the next two weeks, possibly as early as Wednesday.

The passing of the Bill in the early hours of Saturday surprised the industry. Although it had successfully negotiated Congress, its passage through the Senate looked likely to be blocked through lack of parliamentary time.

However, Bill Frist, the Republican leader in the Senate, got the measure through by attaching it to an unrelated Bill that enhances port security.

“Gambling is a serious addiction that undermines the family, dashes dreams and frays the fabric of society,” Dr Frist said. “The bottom line is simple: internet gambling is illegal. Although we can’t monitor every online gambler or regulate offshore gambling, we can police the financial institutions that disregard our laws.”

The ban may drive some small companies out of business, although big operators such as 888 and PartyGaming will highlight the strong prospects of their non-US business.

However, 888 is expected to warn its shareholders in a Stock Exchange statement this morning that its withdrawal from America will force it to pare back its cost base, resulting in a significant hit against this year’s profits.

[boldt]

to us?????

I play poker online what will happen. Am I not going to be able to put money into my firepay account and play???? or will it be illegal for these poker sites to accept it???

how are they going to regulate this?????/

[fitchjr1]

I'm not sure if I can cut and paste the other report I just found, as it was by another gambling website, and I don't know the rules on it, however apparently PartyGaming has issued a statement that they will be axing USA customers if the law is signed by the President. Also in the article is a report that sources say that Pokerstars will be closing to US players. That surprises me, as I felt they would stay..

[jaypasco]

itss all over folks. online gambling is dead and now time to move on. I just purchased 15 office phones and now will be booking much of the northwest action all the way down to idaho.

[Dr. Jack]

Originally Posted by jaypasco

itss all over folks. online gambling is dead and now time to move on. I just purchased 15 office phones and now will be booking much of the northwest action all the way down to idaho.

thanks bdqh

[Bobtheicon]

Originally Posted by jaypasco

itss all over folks.

Was it over when the Germans bombed Pearl Harbor? Hell no!!!!

[alby]

Originally Posted by Bobtheicon

Was it over when the Germans bombed Pearl Harbor? Hell no!!!!

lol. f'kn germans

[domafia]

From reuters...

By Pete Harrison
2 hours, 21 minutes ago

Online gambling firms faced their biggest-ever crisis on Monday after U.S. Congress passed legislation to end Internet gaming there, threatening jobs and wiping 3.5 billion pounds ($6.5 billion) off company values.

Britain's PartyGaming Plc, operator of leading Internet poker site PartyPoker.com, and rivals Sportingbet and 888 Plc said they would likely pull out of the United States, their biggest source of revenue.

"This development is a significant setback for our company, our shareholders, our players and our industry," PartyGaming Chief Executive Mitch Garber said.

The House of Representatives and Senate unexpectedly approved a bill early on Saturday that would make it illegal for banks and credit-card companies to make payments to online gambling sites.

The measure was sent to President George W. Bush to sign into law, which most analysts see as a certainty.

"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."

PartyGaming generates about 78 percent of its revenue from the United States, while Sportingbet gets about 62 percent there.

CRACKDOWN

Shares in PartyGaming, which rakes in nearly $4 million a day from its 19 million customers, fell 57 percent by 1155 GMT.

Sportingbet, which owns sportsbook.com and ParadisePoker.com, lost 60 percent, 888 was down 33 percent and Austria's bwin.com fell 24 percent.

Bwin could be pushed to the brink, having paid heavily for Swedish online poker site Ongame earlier this year to gain access to the U.S. market, said Leopold Salcher, an analyst at Austria's RCB. "This could break their neck," he said.

Online gaming exploded in 2005 with a string of high-profile company flotations in London, which has become the industry's corporate center.

The bulk of revenue has always come from U.S. players, but the firms were located in offshore jurisdictions like Costa Rica and Antigua for fear of prosecution in the United States, where the legal status of online gaming and betting was uncertain.

Shares in Sportingbet and BETonSPORTS had already been hammered after recent arrests of senior executives on charges of illegal gambling in individual U.S. states, but investors remained hopeful online betting and gaming would not be completely banned at a federal level.

Meanwhile, big American corporations like Las Vegas-based Harrah's Entertainment Inc. were forced to sit on the sidelines as gaming money streamed out of the country.

PartyGaming said in a statement, "If the President signs the act into law, the company will suspend all real money gaming business with U.S. residents."

"Any such suspension would also result in the group's financial performance falling significantly short of consensus forecasts for 2006 and 2007," it added.

MERGER SCRAPPED

Stephen Whittaker, joint chief investment officer at Britain's New Star Asset Management, said the likely ban could be challenged.

"This represents protectionism, and the WTO have said you can't do that," said Whittaker, whose portfolio includes about 2 percent of online gaming stocks. "Overall, we'll probably remain with most of our holdings."

"We'll probably reduce one, maybe two," he added. "We want to let the dust settle a bit -- it will take a few days."

Sportingbet said a ban would hit trading and it would scrap a planned merger with World Gaming as a result.

888 Plc said the move would hit its results, as did gaming software provider Playtech, whose shares fell 42 percent.

But Paul Leyland at Arbuthnot Securities said Playtech was relatively well positioned. "The only company for which you could categorically say that redeployment is easy is Playtech," he said. "But for the others it's much more difficult."

A ban would also hit payment processors such as Neteller Plc and Optimal Group's FireOne subsidiary.

[earl1301]

I'm an idiot, but i'm confused on this. I live in U.S., use Neteller to deposit money into Pinnacle...how does this affect me? Can i still do this or will Neteller not allow me? Is Pinnacle going to shut off U.S. folks?

[Dr. Jack]

Originally Posted by earl1301

I'm an idiot, but i'm confused on this. I live in U.S., use Neteller to deposit money into Pinnacle...how does this affect me? Can i still do this or will Neteller not allow me? Is Pinnacle going to shut off U.S. folks?

Earl – Nothing is set in stone yet. If President Bush signs the bill – there will be 270 days before anything is enforced. We’ll learn a lot more then. For now for Pinnacle, netellers, etc – it’s business as usual

[earl1301]

Thanks Jack for the response. I noticed there was a response from neteller in another thread that basically said the same thing.