The
bill had already passed through the House of Representatives but
was not thought likely to be approved by the Senate. The Republican
party, which currently has a majority in both houses, attempted
last week to have the legislation attached to a defence-related
bill which was certain to pass.
That attempt was rebuffed, but late on Friday the party managed
to attach the new legislation to another unrelated bill, one which
strengthens port security. Democrats accused Republicans of forcing
through the law quickly in order to garner support ahead of
congressional elections on 7th November.
The news has had a major impact on online gaming companies, many
of them British. 888 Plc and PartyGaming have said that they will
cease all operations in the US for the foreseeable future. Other
companies, such as PartyGaming and PartyPoker, said that they are
likely to pull out of the US.
"Whilst suspension of US activities will have a material adverse
impact on results for this year and beyond, the company has
significant cash resources which are more than adequate to continue
its operations and further develop its business," said the 888
statement.
Shares in online gambling companies plummeted on the news.
PartyGaming's shares fell by 59% in value over the weekend while
888's fell by 48%.
The law makes it illegal for credit card companies to process
payments for online gambling relating to US residents. Called the
Safe Port Act, it contains a number of provisions known as the
Unlawful Internet Gambling Enforcement Act.
"After taking extensive legal advice, the Board of PartyGaming
Plc has concluded that the new legislation, if signed into law,
will make it practically impossible to provide US residents with
access to its real money poker and other real money gaming sites,"
said a statement from PartyGaming. "As a result of this
development, the Board of PartyGaming has determined that if the
President signs the Act into law, the Company will suspend all real
money gaming business with US residents, and such suspension will
continue indefinitely, subject to clarification of the
interpretation and enforcement of US law and the impact on
financial institutions of this and other related legislation."
The US is a vital market for these companies. PartyGaming
generates around 78% of its earnings from business in the US, while
Sportingbet generas 62% of revenue from the US.
The gambling industry was expecting a clampdown on sports
betting, some in the industry have been surprised that the law
included all gaming, including casino games.
"While US horse race betting, state lotteries, fantasy contests
and certain other online gaming activities have been exclusively
protected under the new law, we are disappointed that the
popularity and skill of poker in particular have not also been
specifically protected," said Mitch Garber, chief executive of
PartyGaming. "The Board respects the laws of the US Government, and
will continue to analyse their applicability, but also continues to
believe that a regulatory framework for online gaming, including
poker and casino gaming is the only sustainable long term
solution."
Meanwhile Peter Dicks, the former chairman of Sportingbet
arrested in New York on behalf of Louisiana, will not stand trial.
The New York governor George Pataki has denied Louisiana the right
to extradite Dicks from New York to Louisiana.
