The news late last week that the merged Goodlatte and Leach Bills
could be debated in the House of Representatives as early as the middle
of this week seemed to impact share prices on the London market.
With the prospect of difficulties in the important US market as a
result of the legislation, which with a few notable and self interested
exceptions seeks to hamper online gambling, some investors were clearly
nervous.
PartyGaming fell 6 percent on Friday and 11 percent over the past
two weeks, although admittedly the activities of certain key management
people cashing in shares didn't help.
888 Holdings plc fell 2.3 percent on Friday; Sportingbet declined
7.6 percent the same day and 11 percent last week.
Empire Online Ltd. dropped by 3.2 percent on Friday and 8.1 percent
last week.
One of the few online gaming companies to even mildly buck the pessimistic
trend was turnkey provider and software developer Playtech, which
actually rose marginally on Friday, but was still down 7 percent for
the week. That could change with good results, and Playtech is due
to publish its second quarter numbers on July 26.
Investor nervousness aside, it should be remembered that even if the
House of Representatives passes the merged Goodlatte and Leach Bills,
it is not the end of the legislative road (or the companies affected
by this ongoing attempted banning activity) by a long way.
The movement to investigate the industry in a sensible and unbiased
manner is gaining momentum with some influential backing, the industry's
growth path continues to strengthen an already very significant industry
and international markets are growing.
The US Senate Judiciary Committee still has to debate its own version
of an anti-online gambling bill, too. With Congressional electioneering
in prospect ahead of the November elections, and a limited timeframe
for this session this sort of legislation could find itself extensively
attacked and in trouble, as was the case in the past.
The Sacramento Bee commented this week on the politicians' attempted
to cripple the industry, pointing out that election-year politics
in the United States have placed online gambling at the top of the
political deck.
In an article by Todd Milbourn, the publication draws attention to
the positioning of the Goodlatte and Leach Bill as one of the 10 items
listed (alongside tax cuts and a flag burning amendment) on the "American
Values Agenda" Republicans rolled out earlier this year. This
is clearly a device to get the legislation on the floor to avoid it
running out of time again.
But Milbourn comments that it might be too late to corral Internet
gambling, anyway. He points to the developments to regulate rather
than ban in the United Kingdom, and says that more than a third of
Internet gamblers are Americans, according to research commissioned
by the American Gaming Association.
"The fact is people are gambling online, and they're going to
continue to do it," Milbourn quotes Holly Thomsen, a spokeswoman
for the AGA. "What the U.S. needs to do is find a way to deal
with it."
Milbourn takes a look at the confused US legal position on Internet
gambling from both the Department of Justice point of view that it
is illegal, to the rulings of US judges that show that its legality
is at the very least debatable.
Illustrating the point, he quotes Martin D. Owens, a Sacramento attorney
who is an authority on online gambling law, and says: "Basically,
it's a mess."
Owens offered an example: "Say we got an online poker room and
one guy is from Australia, one is from New York, one is from California
and the server is in Antigua. Now, who has jurisdiction? I haven't
gotten a straight answer to that in five years."
The complexity of who to ban has forced anti-gambling interests in
Washington to alter their tactics.
Politicians once focused on passing an outright ban, but that was
complicated because it appears that some types of Internet betting
are *acceptable* to powerful lobbies, whilst others are apparently
not. That led to "carve outs" that not everyone was happy
about.
Instead, they're now going after the financing. The Leach Bill seeks
to outlaw the use of U.S.-based bank checks or credit cards to pay
online casinos, sportsbooks and poker room deposits with a view to
gambling. In fact, the US banks have been imposing a similar restriction
for years, and it hasn't stopped the industry.
Even that could be a source of argument. David Robertson, president
of the National Coalition Against Legalized Gambling, one of several
powerful lobbying groups backing the conservative agenda says Leach's
bill is a step in the right direction, but doesn't go as far as he'd
like. For example, he said, the bill excludes the politically powerful
horse racing industry, which profits mightily from legal U.S.-based
sites like youbet.com.
Owens, the lawyer, acknowledged that Internet gambling poses risks.
But he said it's hypocritical to single out one style of play.
"Here's the country that has Las Vegas, Atlantic City, riverboats
up to Iowa and Indian gambling under every tree. Not to mention state
lotteries," said Owens. "Now you're going to turn around
and say Internet casinos are undermining the moral tone of the United
States? It's just plain silly."