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| New system will 'block' gambling | |
| (about 6 hours later) | |
| The US government is tipped to propose a system to identify and stop payment to gambling sites, say specialists. | |
| The news comes after the US Congress passed a bill cracking down on internet gambling, sending shares in UK gambling sites plummeting on Monday. | |
| By Monday close, Partygaming shares fell 58%, 888 Holdings tumbled by 26%, and Sportingbet shares fell 64%. | |
| Some UK firms are looking at stopping bet-taking from US customers if the bill is signed into law. | |
| It is expected that US President George W Bush could sign the bill into law within the next two weeks. | |
| Not that bad | |
| The law, part of a sustained clampdown on online gaming in the US, would make it illegal for banks and credit card firms to process online gaming payments from the US. | The law, part of a sustained clampdown on online gaming in the US, would make it illegal for banks and credit card firms to process online gaming payments from the US. |
| Following the new law, the Treasury Department and Federal Reserve have nine months to suggest new rules. | |
| A so called "coding-and-blocking system" that would prevent payment to gambling sites is being considered, industry experts said. | |
| "If the Treasury and Fed can come up with reasonable rules here, it should not be that bad" said lawyer Oliver Ireland, who has experience working with financial payment firms. | |
| The news comes after firms in the online gambling arena have faced a turbulent year as the threat of a US legal crackdown has depressed share prices. | |
| 'Shadow industry' | 'Shadow industry' |
| I can understand investors will feel a bit of panic Gigi Levy, 888 Holdings See Partygaming shares See Sportingbet shares See Empire Online shares | I can understand investors will feel a bit of panic Gigi Levy, 888 Holdings See Partygaming shares See Sportingbet shares See Empire Online shares |
| Bosses from two firms, Sportingbet and Betonsports, were arrested on illegal gambling charges. | Bosses from two firms, Sportingbet and Betonsports, were arrested on illegal gambling charges. |
| Most analysts expected there would not be enough time for Congress to pass a specific law against online gambling before next month's mid-term elections. | Most analysts expected there would not be enough time for Congress to pass a specific law against online gambling before next month's mid-term elections. |
| But lawmakers took the industry by surprise when an "Unlawful Internet Gambling Enforcement Act" was eventually attached to an unrelated bill aimed at improving port security. | But lawmakers took the industry by surprise when an "Unlawful Internet Gambling Enforcement Act" was eventually attached to an unrelated bill aimed at improving port security. |
| President Bush is thought unlikely to veto a bill which a senior Republican said was needed to regulate a "shadow industry". | President Bush is thought unlikely to veto a bill which a senior Republican said was needed to regulate a "shadow industry". |
| 'Clear implications' | 'Clear implications' |
| Partygaming, 75% of whose revenues derive from the US, said the development was a "significant setback" for it and the whole industry. | Partygaming, 75% of whose revenues derive from the US, said the development was a "significant setback" for it and the whole industry. |
| One of the other firms affected said the move had come as a surprise. | One of the other firms affected said the move had come as a surprise. |
| It is quite clear that the bill as is has a very clear implication on the legality of our activities in the US Gigi Levy, chief operating officer, 888 Holdings See impact of gaming ban | It is quite clear that the bill as is has a very clear implication on the legality of our activities in the US Gigi Levy, chief operating officer, 888 Holdings See impact of gaming ban |
| "It has a specific criminal offence for taking these funds which is something completely new," Gigi Levy, chief operating officer of 888 Holdings, told the BBC. | "It has a specific criminal offence for taking these funds which is something completely new," Gigi Levy, chief operating officer of 888 Holdings, told the BBC. |
| "It is quite clear that the bill as is has a very clear implication on the legality of our activities in the US." | "It is quite clear that the bill as is has a very clear implication on the legality of our activities in the US." |
| Mr Levy said his company was less dependent on the US market than it had been a year ago, having promoted itself in other countries. | Mr Levy said his company was less dependent on the US market than it had been a year ago, having promoted itself in other countries. |
| "I can understand investors will feel a bit of panic," he said, while adding that he was "quite confident" that the firm would recover. | "I can understand investors will feel a bit of panic," he said, while adding that he was "quite confident" that the firm would recover. |
| It is not as if these companies are going to disappear Richard Carter, Numis Securities Send us your comments | It is not as if these companies are going to disappear Richard Carter, Numis Securities Send us your comments |
| Gaming firms which have floated their shares over the past 18 months warned investors that their prospects could be affected by legal uncertainties in the US. | Gaming firms which have floated their shares over the past 18 months warned investors that their prospects could be affected by legal uncertainties in the US. |
| Analysts were divided over the extent of the likely damage to the online gaming business and its global ambitions. | Analysts were divided over the extent of the likely damage to the online gaming business and its global ambitions. |
| One described it as "major shock" to the industry while another said it would remove the uncertainty hanging over the sector. | One described it as "major shock" to the industry while another said it would remove the uncertainty hanging over the sector. |
| "I think there is still a lot of non-US business there and it is not as if these companies are going to disappear," said Richard Carter, an analyst at Numis Securities. | "I think there is still a lot of non-US business there and it is not as if these companies are going to disappear," said Richard Carter, an analyst at Numis Securities. |
| Meanwhile the decision to outlaw gambling elicited some strong support from US politicians. | |
| "Gambling is a serious addiction that undermines the family, dashes dreams and frays the fabric of society," said Bill Frist, Senate Majority Leader. |