BUSH SIGNS ANTI-INTERNET GAMBLING BILL

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Online gambling firms fold as Bush signs banning law
By Gary Parkinson
Published: 14 October 2006
One London-listed online gambling operator called in the administrators while two others sold their United States operations for the nominal sum of $1 yesterday before President George Bush signed America's ban on internet gaming into law.

World Gaming, which derives more than 95 per cent of its sales from the US and also asked earlier this week for trading in its shares on the Alternative Investment Market to be suspended, appointed UHY Hacker Young as administrator.

The decision was taken at the behest of Barclays, a secured creditor that accounts for the bulk of World Gaming's $23m (£12.3m) debts, after the online gaming group determined that it could not continue its US operations. Its demise has been swift. On 7 September, World Gaming revealed that it was in talks to be bought by Sportingbet for £56.6m. Negotiations collapsed when on 29 September the US Congress passed the Unlawful Internet Gambling Enforcement Act, making it a federal offence to accept or handle money derived from online gaming in America.

Yesterday, Sportingbet shut down its enormous Paradise Poker operations in the US, bought for £169m two years ago, and warned of a "significant" write-down on the value of the business. The sports betting business was sold for $1.

Andrew McIver, Sportingbet's chief executive, said: "We are saddened to have to dispose of such a fantastic business as a result of political actions in the US Congress. The sale, however, prevents significant closure costs, which would have been both expensive and time consuming."

The company will keep the Paradise Poker site, but cease accepting American payments. Its shares fell 7.5p to 58.5p, valuing the company at £246.6m.

Meanwhile Alistair Assheton stood down as chief executive of Leisure & Gaming in order to complete a buyout of its US operations for $1. Trading in the shares is suspended.

Another group, Empire Online, which gets 65 per cent of its revenue from US-based customers, terminated all US business, while PartyGaming suspended all its real money gaming activities located in the US with immediate effect ahead of the ban.

One London-listed online gambling operator called in the administrators while two others sold their United States operations for the nominal sum of $1 yesterday before President George Bush signed America's ban on internet gaming into law.