The fallout from new laws restricting internet gaming in the US cast a pall
further across the City yesterday when two more London-listed companies
suspended operations there. Fairground Gaming and Leisure & Gaming, which
run casino and poker websites, joined the mounting casualties from
Congress’s shock decision this month to ban banks and credit card companies
from processing payments from internet gamblers in US states where it is
illegal. FireOne, whose shares change hands on the Alternative Investment
Market, said yesterday it too would no longer process US credit card
payments relating to internet gaming as soon as the law comes into force.
That is expected to happen in a matter of weeks, once President George Bush
signs the Unlawful Internet Gambling Enforcement Act. Meanwhile, one of the
City’s leading law firms reportedly withdrew from advising on the sector.
Slaughter and May, legal counsel to more of Britain biggest companies than
any other firm, was unavailable to comment on suggestions it would no longer
advise internet gaming companies after the US clampdown. Many of the online
gaming groups derive the lion’s share of revenues from across the Atlantic.
The US ban has, therefore, hit the industry hard. Shares were hammered last
week, with more than £3bn wiped off their valuation on the London market in
a day. Yesterday, Fairground fell 8.5p to 14.5p, Leisure & Gaming crept
0.75p higher to 8.75p, and Fire- One lost 17.5p to 50p. Trading in the
shares of World Gaming, another internet gambling company, was suspended on
Monday after it warned that in light of the US legislation, which in effect
turns off 95 per cent of revenues, it may be driven out of business.
Less than a week after admitting it may be in breach of loan conditions,
World Gaming asked for trading in its shares to be suspended “due to a
fundamental uncertainty over its ability to continue trading”.
Unlike World Gaming, Fairground insisted it was “confident” its remaining
operations, which account for just 30 per cent of sales, were profitable,
and stressed that it had sufficient cash to go forward.
“Urgent” cost cuts are imminent and a tie-up with another company may be on
the cards. Fairground is reviewing its overall strategy. “We are proceeding
with appropriate caution in evaluating opportunities for further
geographical diversification,” the company said.
Leisure & Gaming is mulling whether to suspend, close or sell its US
operations and has received approaches. Talks continue, while it
concentrates on its UK and Italian businesses. Job will go at FireOne, which
is restructuring and paring costs.
