US Reprieve for Online Gaming

[Dr. Jack]

US Reprieve for Online Gaming

There is a great deal of expectation surrounding the online gaming industry these days with a spate of positive news to boost the sector. We have had strong earnings results from several publicly traded gaming companies, stocks are rising, advertising rules are relaxing (well in the UK at least), and now some positive murmurs from the US.


Rumours have been growing surrounding the possibility that charges may be dropped against John Lefebvre and Stephen Lawrence, the former Neteller directors and the London Financial Times today reported on efforts by Barney Frank, the Democratic chairman of the House Financial Services Committee to repeal the Unlawful Internet Gambling Enforcement Act (UIGEA) which was passed by the US Congress last year.



Congressman Frank has long been opposed to a ban on internet gambling and it is hoped that with a strengthened Democratic party on Capitol Hill, he may be able to push through changes which would at least soften the law.



Speaking in Congress last year prior to the UIGEA, he responded to claims that online gaming contributes nothing to the US economy by stating, “Has it become the role of this Congress to prohibit any activity that an adult wants to engage in voluntarily if it doesn't add to the GDP or make us more competitive? What kind of socio-, cultural authoritarianism are we advocating here?”



Addressing the moral argument, Mr. Frank went on to say “I agree there is a practice around today that causes a lot of problems, damages families, people lose their jobs, they get in debt. They do it to excess. It is called drinking. Are we going to go back to Prohibition? Prohibition didn't work for alcohol; it doesn't work for gambling.”



At 1515 GMT today in London, shares of PartyGaming (LSE:PRTY) were up 17%, 888 Holdings (LSE:888) was up nearly 6%, and Sportingbet (LSE:SBT) had advanced more than 7%.

[Dr. Jack]

Legislation to Repeal Online Gambling Ban May Be Coming

The Financial Times online edition (subscription required for full article) has noted from an interview that Barney Frank, the democratic House Financial Services Committee chairman, is working on legislation to repeal the ban on online gambling in the US that was passed last year. "Working on" is hard to define without more information

It is not clear at all if this is a "total repeal" or just a loosening of the laws. It is also a question as to whether or not this legislation could even make it to the White House through Congressional votes, and it is unclear of this would be for 2008 and beyond or if it was sooner. But either way, you have to look no further than Cryptologic (CRYP) to see how this could impact other stocks in the sector (they make online gaming software) if there is any truth to this. CRYP has even managed to defy a weak market if you look at the shares.

In Australia, companies like Betcorp and Lasseters Corp were hit hard last year because of the ban. In the UK, companies like PartyGaming Plc and 888 Holdings were also hit in 2006 over such issues. Gigamedia (GIGM) and American Wagering (BETM) were also noted in a story late yesterday along with pari-mutuel horseracing company Youbet.com (UBET). We have all missed the PartyPoker commercials as well.

Once again, take heed that "an interview" and "legislation" can be taken way out of context and there is always the possibility that this could be dead before it even gets started. My own call in so far has partially confirmed this, but with no details yet known. Many of the European online gaming stocks also made some rather large moves last week because of some loosening of regulations in the EU. There is not even assurance that it will make it to the form of a bill, so if you take any of this as "gospel" or as "fact" then the point has not been stressed enough that there may be no follow-through in reality.

I did put in a phone call to Congressman Frank's office and was told that this is true, but I have not been able to get the details from the Financial Services Committee as of yet. I am awaiting a call back to give more details.

Jon C. Ogg
March 14, 2007

[OldMan]

Sounds like good news, now if we can get enough Democrats elected maybe we can focus on the real "problems" in our world.

Good stuff, Doc.

OldMan

[Dr. Jack]

Probably not much steam to it but heck it’s better than nothing. I just figured I would post it when I saw it

[matthewt]

Congressman Barney Frank, chair of the House Financial Services Committee, is considering legislation that would overturn a ban on online gambling passed last fall. B. Frank calls the US ban "preposterous" and one of the "stupidest" laws ever passed.

Praise the Lord - there is a God and he opposes online gambling prohibition!

Send 10% of your income to:
Barney Frank
2252 Rayburn House Office Building
Washington, D.C. 20515-2104



Barney's Other Contact info:
Phone: (202) 225-5931
Fax: (202) 225-0182
Web Site: www.house.gov/frank

See http://www.eyewitnessnewstv.com/Glob...3&nav=menu20_3