Jim Chanos of New York’s Kynikos Associates was bearish on internet gambling
sights long before Senate majority leader Bill Frist “ambushed” the industry
with a bill making most internet gambling illegal. Contrary to claims
detailed on a website yesterday, it didn’t take an elaborate scheme of
inside information about the Senate’s legislative schedule to tip Chanos off
on the dangers to internet gambling. For Chanos, the writing was on the
wall, in the online gaming companies’ prospectuses and already built into
various state laws. “We were floored when the Senate bill came up and passed
in the middle of the night,” Chanos told DealBreaker in an interview this
morning. On September 30, 2006, the US Senate passed the port security
improvement act of 2006 by unanimous consent. The bill included an amendment
preventing financial entities from processing credit cards, checks and
similar transactions in connection with Internet gambling. Despite the fact
that similar measures had passed in the House, many were caught off-guard by
the inclusion of the anti-online gambling provisions in the Senate Bill.
Indeed, some commentators had speculated that the Senate lacked time on the
legislative schedule to pass the bill.