The expected impact of HR4954, being called the Internet Gambling Bill but actually the Port Security Bill (or its title: ‘To improve maritime and cargo security through enhanced layered defenses, and for other purposes’), depends on which report one reads. UK online gambling companies are reportedly in crisis whilst in the US it is being suggested that the bill will have little effect other than limiting Visa/Mastercard transactions. On Saturday the port security bill, with a watered down Unlawful Internet Gambling Enforcement Bill attached, was passed in the Senate and will now be sent to President Bush for signing.

If a correlation between money laundering, online gaming and port security can be argued then attaching the gambling bill to the port security bill could seem slightly less bizarre. Whatever the merits of the case against online gambling, and the US moves against it, the markets have reacted to the passage of HR4954 with a steep fall in share value for online operators. PartyGaming, Sportingbet, Empire Online, 888 Holdings and others will be seeking legal clarification and most will suspend their US activities before President Bush signs the legislation into law, expected to be within two weeks. There will be 270 days allowed for the US Secretary of the Treasury to issue regulations requiring financial institutions to block transactions in connection with Internet gaming.

As 888 Holdings PLC announced in a statement published today, “In many respects the precise effect of the legislation is unclear and it is not yet known what the implementing regulations will say, or how financial institutions at whom part of the legislation is directed will react. However, this legislation indicates Congressional intent to treat internet gaming, whether sports related or not, as illegal. In addition, it is the first federal measure to address internet gaming explicitly. This represents a significant development in the US legal status. The Act also addresses certain jurisdictional and other uncertainties in the previous U.S. legal situation.”

Mitch Garber, Chief Executive Officer of PartyGaming, said, “This development is a significant setback for our company, our shareholders, our players and our industry. While US horse race betting, state lotteries, fantasy contests and certain other online gaming activities have been exclusively protected under the new law, we are disappointed that the popularity and skill of poker in particular have not also been specifically protected. The Board respects the laws of the US Government, and will continue to analyse their applicability, but also continues to believe that a regulatory framework for online gaming, including poker and casino gaming is the only sustainable long term solution.”

Whilst the online gaming companies consider the new legislation, the French Professional Football League (LFP) has already banned its clubs from advertising gambling and online betting. Monaco had to remove advertising boards for bwin.com before Saturday’s match could begin. The LFP insists that French clubs had previously been warned about the risks involved by accepting online gaming firms as sponsors. Gambling in France is a state monopoly. (E-10-02-06)

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