Online gambling shares continue to rise despite bill to ban activity passing House

The passage of a bill on the House floor by a 317 to 93 vote banning online gambling has failed to hurt gambling company shares.  In fact, it seems to have done quite the opposite.

Both Sportingbet and PartyGaming's shares rose after analysts said the latest attempt to ban internet casinos would fail despite its overwhelming support by the House.

The Internet Gambling Prohibition and Enforcement Act was co-sponsored by Republican congressman Bob Goodlatte, who has called online gaming a "scourge on our society". It was passed by 317 votes to 93.

And while Arizona Republican Senator Jon Kyl is an adamant supporter of anti-online gambling legislation, the Senate is yet to make this a priority and its passage on the Senate floor appears unlikely at this time.  The Arizona Senator has said he will aggressively pursuit it (an online gambling ban) nonetheless.

The London Telegraph reported Thursday that if the Bill is agreed by the Senate, "it would be a devastating blow for a host of UK-listed companies, which have grown rapidly thanks to the popularity of online poker in America. PartyGaming, the biggest UK-listed gambling firm, for instance, reckons 80pc of its site's regular users are US citizens. The American Gaming Association estimates half the $12bn (£6.5bn) online gambling industry is dependent on American betters."

The Goodlatte Bill would make it illegal for US financial institutions to transfer money to offshore gambling websites or to the online payment services those sites use. Some US institutions, such as Citibank and American Express, already ban gambling transactions on their credit cards.

The Senate is not likely to find enough time to debate the bill prior to its yearly recess, which would then mean another bill would have to be drafted for next year and for a seventh consecutive year (excluding 2005 where there was no proposed legislation), attempts to stymie online gambling would once more fail.

Additionally, 2006 marks the first time the online gambling industry has had such a strong voice in Washington and within the mainstream media thanks to solid lobbying efforts from online gambling companies and the 30,000 plus member strong Poker Players Alliance

"We are determined to establish provisions for online gambling
businesses to be taxed in the United States and to create measures to
effectively control underage and problem gambling," said BETonSPORTS
CEO David Carruthers. "BETonSPORTS and other industry leaders share
these same concerns as Representatives Leach and Goodlatte. Efforts to
prohibit online gambling in the United States have failed repeatedly,
proving that prohibition cannot effectively or expeditiously address
these concerns. Instead, Congress should focus its energy and
resources on viable solutions through regulation to protect consumers
and to control underage and problem gambling and to ensure the United
States receives the billions of dollars in tax revenues it deserves
from Americans who wager online each year."

PartyGaming's shares closed up 4½ to 110¼p, 888 Holdings' fell 3 to 205p and Sportingbet's rose 9 to 340p.

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Gambling911.com News Wire

Originally published July 13, 2006 10:11 am EDT