Online gambling law move causes stock-market bloodbath

LONDON and NEW YORK - Online gambling companies are scrambling to find loopholes in new legislation to outlaw bets by American internet users after more than £3 billion ($8.6 billion) was yesterday wiped off their value on the London stock market.

Some of the biggest names in global internet gaming are poised to abandon their lucrative US business as soon as President George W. Bush signs legislation that will cripple the US$6 billion ($9.1 billion) industry. The bill is due to be signed in the next two weeks.

PartyGaming was the biggest casualty of the bloodbath, losing almost £2 billion of its market capitalisation after its shares crashed 58 per cent to 45p. Sportingbet saw £500 million, wiped off its valuation while 888 lost £128 million.

Mitch Garber, chief executive of PartyGaming, said the law would make it "practically impossible" to provide US customers with access to its sites, meaning its financial performance would fall "significantly" short of City expectations. 888, which makes half of its profits in the US, and Sportingbet issued similar warnings.

Under the proposed law, which was rushed through before Congress went into recess ahead of the US mid-term elections next month, it will become illegal to take any money on bets made over the internet in the US.

Lobby groups and analysts expressed scepticism that the law would be enforceable. "Money always has a habit of finding its way to where it wants to go," said Frank Fahrenkopf, president of the American Gaming Association.

John Anderson, 888's chief executive, said: "This will just drive it underground."

Sportingbet said it intended to lobby the WTO to find out whether the legislation would violate US commitments under the general agreement of trade and services.

One senior executive said it was possible that non-credit card payments could be exempted. Another said it was possible cash bets could be exempted.

- INDEPENDENT