Web gaming firms weigh options after US bill wipes off billions
LONDON - Internet gaming companies are looking at how to fight back against US legislation that has wiped billions of pounds off their stock market value.
Shares in internet gaming companies including PartyGaming, 888 Holdings and Sportingbet plummeted yesterday after the passing of a law by Congress that will make it illegal for US banks to process online gaming payments.
Investors reacted with a massive sell-off of internet gaming stocks, leading to a £3.7bn fall in their combined market value. PartyGaming, the biggest of the lot, is set to lose its status as a FTSE-100 company next time there is a reshuffle.
There is also question of what will happen to these firm's adspend. Online gaming firms have been big spenders in recent months with 888.com sponsoring programming on ITV and using outdoor advertising.
The immediate response by several companies was to suspend their US operations. However, they are arguing that the decision to effectively ban their US operations has nothing to do with fears over an epidemic of gambling addicts and everything to do with protectionism.
They point out that US-based gambling interests, such as horseracing, betting on sports -- not to mention the Mecca of gambling, Las Vegas -- are untouched by the new legislation.
In an interview with the BBC this morning, Nigel Payne, Sportingbet chief executive, criticised the government for not doing anything to support UK internet gaming firms.
He said: "What in fact is happening is overt protectionism going on between the United States and the United Kingdom. And it's somewhat disappointing that the European Union and the UK government seem somewhat disinterested in protecting the UK companies."
PartyGaming has said it will focus on its non-US interests if the bill is signed into law by President Bush.
However Mitch Garber, Partygaming's chief executive, said: "This development is a significant setback for our company, our shareholders, our players and our industry.
"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."
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