US CASINOS HEAD FOR THE ISLANDS TO AVOID US BAN
Oct. 13, 2006. 01:00 AM
REUTERS NEWS AGENCY
LONDON—A looming U.S. ban on Internet gambling is already scaring off London-listed operators, but the industry will continue to thrive in the hands of private operators in locations like Costa Rica, Antigua and Curacao.
The fear of extradition to the United States has forced executives in the United Kingdom to turn away from their most lucrative market, some selling their U.S. operations to counterparts in and around the Caribbean which have less amenable extradition treaties with the United States.
Sportingbet CEO Nigel Payne this week reassured Antiguans the company would not downsize its operations there and is in talks to sell its U.S.-focused business to a private firm.
Leisure & Gaming’s U.S operations VIP and Nine.com are also likely to end up in private hands, with sale talks underway.
Analyst Tejinder Randhawa at Evolution Securities said the industry was splitting into two camps: the European-listed companies and those elsewhere looking to exploit the U.S. ban.
“The market will not go cold-dead overnight,” he said. “There are huge opportunities, and all the private offshore operators are licking their lips.”
U.S. Congress passed a bill to outlaw online gambling this month, with President George W. Bush expected to sign it into law today. Many U.K. companies immediately announced plans to pull out, wiping $7 billion (U.S.) off their shares.
“U.S. gambling is untenable for London-listed companies, but these U.S. operations are all viable and profitable businesses that have a future,” said a source close to Leisure & Gaming.
The U.S. ban will also make it illegal for banks and credit-card companies to process payments to online gaming companies. “But no doubt there will be operators that spring up to handle the payments,” said Randhawa.
About 170 websites have declared their intention to stop accepting U.S. players, the vast majority since Congress passed the act, according to gaming website Casino City, which expects 10 per cent to 15 per cent of the world’s 2,700 or so gaming websites to eventually block U.S. customers.
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