Shocker101
06-06-2007, 08:25 AM
this is a good article that I found reguarding the US rethink their stance on online poker
Five European public online gambling companies, which together took in some $1.4 billion from U.S. customers in 2005 alone, watched their share prices tank and profits collapse when a bill banning Internet gambling payments was signed into law last October by President George W. Bush (see BusinessWeek.com, 10/02/06, "Party's Over for Online Gambling").
The carnage was perhaps even worse than predicted. One company, London-based BetOnSports.com, saw its shares suspended after Chief Executive Officer David Carruthers was arrested and recently pleaded guilty to federal racketeering charges in the U.S. Another, Empire Online, based in Tortola (British Virgin Islands), gave up its online gambling activities entirely and became an investment company (see BusinessWeek.com, 8/21/06, "Online Gambling Hedges Its U.S. Bets").
Others, including Sportingbet.com, 888 Holdings, and PartyGaming, which bought Empire Online's poker customers, have weathered the fallout by shifting their focus to Western European gamblers. But their share prices haven't come close to recovering: Most are now trading at around a quarter of their peaks in the summer of 2006, though they've risen some in recent months.
U.S. Rethinking Ban
An odd coalition of antigambling conservatives, Las Vegas interests, and law enforcement were behind the passing of the 2006 ban, but now that the bill's impact is registering—little decrease in overall gambling levels, and a shift away from aboveboard operations to more shadowy outfits—some analysts believe the U.S. may reverse its stance. That could open the door for European operators to reenter the lucrative U.S. market.
The possibility of legal and legislative relief in the U.S. could help the kings of online gambling get a second shot at being hot-growth stocks. In March, Sportingbet struck a deal with the state of Louisiana to drop charges of "gambling by computer" that had been filed against its former chairman, Peter Dicks.
And both 888 Holdings and PartyGaming publicly acknowledged this week that they are negotiating with the U.S. Attorney's Office for the Southern District of New York to obtain amnesty for having offered online gaming inside the U.S. prior to October, 2006, when the ban went into effect. (Neither company returned calls from BusinessWeek on June 5.)
Perhaps most important, the House Financial Services Committee is expected to hold a hearing June 8 to consider a bill that would again make it legal for banks and credit-card companies to process payments for online gambling sites, potentially allowing Europe's online gambling companies to do business again in the U.S. market.
Reform Is Inevitable
Though it's far too early to pop the champagne—few Washington observers think the bill has a chance of passing right away—analysts in Europe say a change in the current situation is inevitable. Why? In part because even though the U.S. ban forced publicly traded companies like PartyGaming and 888 Holdings to pull out of the U.S., the void was quickly filled by private outfits offering unregulated online gaming services to U.S. customers.
Consider PokerStars, one of more than 350 sites that are licensed by the Kahnawake Gaming Commission, run by a Mohawk Indian tribe outside Montreal. While most forms of sports betting are forbidden in the U.S., games such as poker fall into a gray area
Five European public online gambling companies, which together took in some $1.4 billion from U.S. customers in 2005 alone, watched their share prices tank and profits collapse when a bill banning Internet gambling payments was signed into law last October by President George W. Bush (see BusinessWeek.com, 10/02/06, "Party's Over for Online Gambling").
The carnage was perhaps even worse than predicted. One company, London-based BetOnSports.com, saw its shares suspended after Chief Executive Officer David Carruthers was arrested and recently pleaded guilty to federal racketeering charges in the U.S. Another, Empire Online, based in Tortola (British Virgin Islands), gave up its online gambling activities entirely and became an investment company (see BusinessWeek.com, 8/21/06, "Online Gambling Hedges Its U.S. Bets").
Others, including Sportingbet.com, 888 Holdings, and PartyGaming, which bought Empire Online's poker customers, have weathered the fallout by shifting their focus to Western European gamblers. But their share prices haven't come close to recovering: Most are now trading at around a quarter of their peaks in the summer of 2006, though they've risen some in recent months.
U.S. Rethinking Ban
An odd coalition of antigambling conservatives, Las Vegas interests, and law enforcement were behind the passing of the 2006 ban, but now that the bill's impact is registering—little decrease in overall gambling levels, and a shift away from aboveboard operations to more shadowy outfits—some analysts believe the U.S. may reverse its stance. That could open the door for European operators to reenter the lucrative U.S. market.
The possibility of legal and legislative relief in the U.S. could help the kings of online gambling get a second shot at being hot-growth stocks. In March, Sportingbet struck a deal with the state of Louisiana to drop charges of "gambling by computer" that had been filed against its former chairman, Peter Dicks.
And both 888 Holdings and PartyGaming publicly acknowledged this week that they are negotiating with the U.S. Attorney's Office for the Southern District of New York to obtain amnesty for having offered online gaming inside the U.S. prior to October, 2006, when the ban went into effect. (Neither company returned calls from BusinessWeek on June 5.)
Perhaps most important, the House Financial Services Committee is expected to hold a hearing June 8 to consider a bill that would again make it legal for banks and credit-card companies to process payments for online gambling sites, potentially allowing Europe's online gambling companies to do business again in the U.S. market.
Reform Is Inevitable
Though it's far too early to pop the champagne—few Washington observers think the bill has a chance of passing right away—analysts in Europe say a change in the current situation is inevitable. Why? In part because even though the U.S. ban forced publicly traded companies like PartyGaming and 888 Holdings to pull out of the U.S., the void was quickly filled by private outfits offering unregulated online gaming services to U.S. customers.
Consider PokerStars, one of more than 350 sites that are licensed by the Kahnawake Gaming Commission, run by a Mohawk Indian tribe outside Montreal. While most forms of sports betting are forbidden in the U.S., games such as poker fall into a gray area