Congress’ online gambling bill cuts Internet firms’ stock value
WASHINGTON (BP)--Congress approved legislation restricting Internet gambling just before beginning a lengthy recess, prompting a major shakeup in the online wagering world.
News of the congressional action sent online gambling companies into a tailspin when stock markets reopened Oct. 2. Shares of PartyGaming, the largest of the Internet firms, decreased 58 percent on the London Stock Exchange, with the company losing about $3.8 billion of its market capitalization in the process, according to The New York Times. Another online company, 888 Holdings, saw its shares fall 26 percent on the same day, The Times reported.
Both companies, which are based in Gibraltar, said they would halt transactions with American bettors if Bush, as is expected, signs the bill into law. PartyGaming receives 78 percent of its income from the United States, The Times reported.
The Senate and House of Representatives passed the Unlawful Internet Gambling Enforcement Act in the early hours of Sept. 30. Both houses approved the measure as part of a bill to provide protection for America’s ports, with the Senate passing it by a voice vote and the House in a 409-2 roll call.
The gambling measure requires financial institutions to block credit card and other payments to Internet wagering businesses, which are primarily located overseas.
Mitch Garber, PartyGaming chief executive, told The Times, “This development is a significant setback for our company, our shareholders, our players and our industry.”
The private nature of Internet gambling has result in its widespread use by minors and young adults as well as addiction problems for people of all ages, opponents of the booming illegal enterprise have said. Americans were expected to pay $5.9 billion, about half of the $12 billion wagered worldwide on Internet gambling, to online casinos overseas this year, bill sponsors said. Online gambling sites frequently act as fronts for money laundering, drug trafficking and financing for terrorists, they said.
Richard Land, president of the Southern Baptist Ethics & Religious Liberty Commission, said, “All friends of families should be delighted with this legislation, which will help to curb the growing scourge of Internet gambling, one of the most rapidly expanding addictions in America. Thousands of families have faced financial ruin and bankruptcy because of such Internet gambling addictions.
“This legislation will make it more difficult for these Internet gambling predators to reach into the pockets of America’s families and steal the future of children and spouses,” he said. “Congress should be applauded for passing this legislation.”
Rep. Jim Leach, R.-Iowa, who led the House effort in behalf of the measure, said in a written statement, “If Congress had not acted, gamblers would soon be able to place bets not just from home computers but from their cell phones while they drive home from work or their Blackberries as they wait in line at the movies.
“Internet gambling’s characteristics are unique. Never has it been so easy to lose so much money so quickly at such a young age,” Leach said. “Everyone loses if this industry continues its remarkable growth trends.”
The legislation requires the Treasury Department to publish regulations that would require financial institutions to bar transactions between U.S. bettors and online gambling companies. Violators could be fined or penalized.
The measure, however, does not include a provision passed earlier by the House that would have updated a 1961 law prohibiting betting over telephone wires to cover online gambling.
The lead sponsor in the Senate was Sen. Jon Kyl, R.-Ariz., who commended Senate Majority Leader Bill Frist and Speaker of the House Dennis Hastert for shepherding the measure through both houses as part of a final bill negotiated by a conference committee of senators and representatives.