Thursday, October 19, 2006

The Unlawful Internet Gambling Enforcement Act of 2006 amends Chapter 53 of
title 31, United States Code, by adding at the end the following:
"SUBCHAPTER IV PROHIBITION ON FUNDING OF UNLAWFUL INTERNET GAMBLING".
Chapter 53 deals with Monetary transactions and is designed to; "increase
the strength of United States measures to prevent, detect, and prosecute
international money laundering and the financing of terrorism...(and) to
provide a clear national mandate for subjecting to special scrutiny those
foreign jurisdictions, financial institutions operating outside of the
United States, and classes of international transactions or types of
accounts that pose particular, identifiable opportunities for criminal abuse
." The Act makes unlawful the receipt by a gambling business of proceeds or
monies in connection with unlawful internet gambling. It represents the
first piece of Federal legislation to explicitly deal with online gambling,
and it makes clear the US government's intention to stop the flow of funds
from Americans to online gaming operators through criminal sanction. Under
the Act "Restricted transaction" is taken to mean any transmittal of money
involved with unlawful Internet gambling, whilst a "bet" is construed as
including;

"the staking or risking by any person of something of value upon the outcome
of a contest of others, a sporting event, or a game subject to chance, upon
an agreement or understanding that the person or another person will receive
something of value in the event of a certain outcome (and) any instruction
or information pertaining to the establishment or movement of funds by the
bettor or customer in, to, or from an account with the business of betting
or wagering."

The term 'financial transaction provider' means a creditor, credit card
issuer, financial institution, operator of a terminal at which an electronic
fund transfer may be initiated, money transmitting business, or
international, national, regional, or local payment network utilized to
effect a credit transaction, electronic fund transfer, stored value product
transaction, or money transmitting service, or a participant in such
network, or other participant in a designated payment system.

In response to the passing of the Act Sportingbet and Leisure & Gaming sold
off their US facing business for $1. PartyGaming, 888 and Betcorp all ceased
taking bets from US citizens, whilst World Gaming went into administration.
The collapse of the sector and the rapid sell off of company assets, without
shareholder approval, was unprecedented in the corporate history of the UK.

Nonetheless, a number of concerns have taken a decision to stay in the
US-facing online gambling market, including a number of publicly quoted
companies.

International All Sports Ltd
International All Sports Ltd (IAS) was formed in July 1995 by leading
Australian bookmaker Mark Read, with seed capital provided by a small group
of investors, including three leading Melbourne based bookmakers. The
company was listed on the Australian Stock Exchange on 6 August 1999. On 6
August 2004 International All Sports Limited merged with fellow Australian
bookmaker Canbet Limited, under the terms of which, Canbet shareholders
received 1 IAS share for every 25 Canbet shares they held. The Northern
Territory Racing Commission subsequently awarded a sports bookmaking licence
to Canbet, allowing the company to operate a 24/7 internet and telephone
race and sports betting service.

In response to the passing of the Act the company issued the following
statement to the Australian Stock Exchange;

"The Board of International All Sports Limited is disappointed that the USA
Government is passing laws to circumvent its commitment under the General
Agreement of Trade and Services to the World Trade Organisation to allow
free international trade in an effort to protect USA gaming companies that
operate in the USA. The Board notes that USA horse racing has been exempted
from the legislation and as such would not affect the business of
IASbet.com. The financial effect on Canbet, the international brand of IAS
that operates out of the United Kingdom is not expected to have any
financial effect as to the operating profit of the group. The Board has
taken legal advice and will continue to take further advice with the
objective of understanding the regulations and procedures which have yet to
be completed."