Thursday, October 05, 2006

Congress approved legislation restricting Internet gambling just before
beginning a lengthy recess, prompting a major shakeup in the online wagering
world.
News of the congressional action sent online gambling companies into a
tailspin when stock markets reopened Oct. 2. Shares of PartyGaming, the
largest of the Internet firms, decreased 58 percent on the London Stock
Exchange, with the company losing about $3.8 billion of its market
capitalization in the process, according to The New York Times. Another
online company, 888 Holdings, saw its shares fall 26 percent on the same
day, The Times reported. Both companies, which are based in Gibraltar, said
they would halt transactions with American bettors if Bush, as is expected,
signs the bill into law. PartyGaming receives 78 percent of its income from
the United States, The Times reported. The Senate and House of
Representatives passed the Unlawful Internet Gambling Enforcement Act in the
early hours of Sept. 30. Both houses approved the measure as part of a bill
to provide protection for America's ports, with the Senate passing it by a
voice vote and the House in a 409-2 roll call. The gambling measure requires
financial institutions to block credit card and other payments to Internet
wagering businesses, which are primarily located overseas. Mitch Garber,
PartyGaming chief executive, told The Times, "This development is a
significant setback for our company, our shareholders, our players and our
industry." The private nature of Internet gambling has result in its
widespread use by minors and young adults as well as addiction problems for
people of all ages, opponents of the booming illegal enterprise have said.
Americans were expected to pay $5.9 billion, about half of the $12 billion
wagered worldwide on Internet gambling, to online casinos overseas this
year, bill sponsors said. Online gambling sites frequently act as fronts for
money laundering, drug trafficking and financing for terrorists, they said.

Richard Land, president of the Southern Baptist Ethics & Religious Liberty
Commission, said, "All friends of families should be delighted with this
legislation, which will help to curb the growing scourge of Internet
gambling, one of the most rapidly expanding addictions in America. Thousands
of families have faced financial ruin and bankruptcy because of such
Internet gambling addictions.

"This legislation will make it more difficult for these Internet gambling
predators to reach into the pockets of America's families and steal the
future of children and spouses," he said. "Congress should be applauded for
passing this legislation."

Rep. Jim Leach, R.-Iowa, who led the House effort in behalf of the measure,
said in a written statement, "If Congress had not acted, gamblers would soon
be able to place bets not just from home computers but from their cell
phones while they drive home from work or their Blackberries as they wait in
line at the movies.

"Internet gambling's characteristics are unique. Never has it been so easy
to lose so much money so quickly at such a young age," Leach said. "Everyone
loses if this industry continues its remarkable growth trends."

The legislation requires the Treasury Department to publish regulations that
would require financial institutions to bar transactions between U.S.
bettors and online gambling companies. Violators could be fined or
penalized.

The measure, however, does not include a provision passed earlier by the
House that would have updated a 1961 law prohibiting betting over telephone
wires to cover online gambling.