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October 4th 2006
Gaming industry in turmoil as US bans online gambling
The online gaming industry is in complete turmoil as it tries to come to terms with the effects of a new US law making it illegal for banks and credit card firms to process online gambling payments from the US.
Please accept my apologies for the late coverage of this cataclysmic event, but the first I heard of it was when I stepped off the plane from Aruba, having spent the last few days there for the UltimateBet Poker Championships. Opening the free Metro newspaper on the Tube back from Heathrow I read the piece with a sense of excitement and dread.
Late Friday evening, in a sneaky move that caught everyone by surprise, Congress linked a bill intended to ban online gaming to the latest bill regarding increasing port security. The latter bill was almost guaranteed to pass, and it did, by a margin of 409-2. Just like that, with a clever piece of engineering, Senator Bill Frist, Senator Jon Kyl and all their crusading anti-gambling buddies had managed to get the Unlawful Internet Gambling Enforcement Act passed. Had they not tacked it onto the port security bill there was no way Congress could have found time to pass a law aimed specifically at online gaming. Now, in two weeks, the President will sign the bill into law, and online gambling in the US, will to all extents and purposes, become illegal.
Like all such matters, the new law is complicated, not least because of how difficult it will be to enforce. Technically speaking the bill does not outlaw the activity of gambling online, but it does outlaw the payment of gambling monies to and from US banks and credit cards. How it relates to other payment methods such as NETeller is not yet clear however, and it may be some time before the full reach of the new law is understood.
There can be no doubting its immediate effect however. PartyGaming, operators of the world’s biggest online poker room PartyPoker.com, issued a statement on Monday morning saying: “If the President signs the Act into law the Company (PartyGaming) will suspend all real money gaming business with US residents.”
PartyGaming’s share price has taken a thorough hammering in the aftermath of both the passing of the law and PartyGaming’s declaration that they will suspend business with US customers. Shares fell by over 60% and across the board other publicly listed gaming companies suffered similarly catastrophic slumps in their share prices. Judgement day, for the online gaming industry at least, has arrived.
While the law is undoubtedly a huge blow to the entire online gaming industry it is important to note that not all sites are taking as drastic action as PartyGaming. Bodog and UltimateBet for example, have both issued statements suggesting they intend to carry on as per usual. And Full Tilt issued a similar statement, adding that they: “(did) not expect any immediate impact from the legislation, as the banking industry has 270 days to implement new rules after the bill is signed.”
Good news it may be, but it did little to soften the mood of Michael Bolcerek, president of the Poker Players Alliance (PPA). Speaking with the backing, no doubt, of every American online poker player, he said: “This last minute deal reeks of political gamesmanship. The American people should be outraged that Congress has hijacked a vital security bill with a poker prohibition that nearly three fourths of the country opposes. The millions of Americans who enjoy playing this great game will have the last voice in this debate come Election Day.”
This story is bound to develop dramatically over the next few days so keep reading to stay up to date with the whole sad affair.
Submitted: 04/10/2006 18:05:19
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