Thursday, October 19, 2006

Online gambling companies PartyGaming and 888 have both been demoted on
prestigious FTSE stock indexes in the UK, following the unexpected passing
through the Senate of a US bill which aims to make it illegal for US banking
institutions to process transactions to online gambling companies. President
Bush signed the bill into law on Friday, and publicly-listed companies
PartyGaming and 888 immediately blocked wagering from US residents. When the
bill was unexpectedly passed through the US Senate after it was attached to
the unrelated Ports Security Bill, shares of publicly traded online gambling
companies nose-dived. PartyGaming has lost around 75% of its value following
the news, with 888 losing around 50% of its value. As a result, PartyGaming
dropped off the FTSE 100 list into the FTSE 250 Index. As a result, 888 was
relegated from the FTSE 250 onto the FTSE Small Cap Index. Many online
gambling companies will continue to provide betting services to US
residents, as the new law does not make online gambling illegal - it simply
aims to make it more difficult to fund player accounts.
Moral reasons were cited by proponents of the bill, but it is largely
believed that the US government was worried that much of the online gambling
industry was based overseas, and wanted to restrict the flow of US funds
over their border. Industry analysts expect the new law will largely be
ineffective, as US banking institutions may strain under the weight of
regulation, and may not be able to fully prevent the funding of accounts
through checks and wire transfers.