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Last Updated: Tuesday, 3 October 2006, 16:44 GMT 17:44 UK
Misery continues for gaming firms
Playing card and betting chips
Gambling firms have relied heavily on revenue from the US
Internet gambling company World Gaming has said it could be in "technical default of its loan conditions", as its debt level rockets to $23m (12.7m).

The London-based firm saw its shares fall on Tuesday by a third after saying it was in "discussions with lenders".

It comes as it and other gambling firms have seen their revenue streams under threat, after a new US law was passed.

And Party Gaming, the largest UK-listed gaming firm has scrapped its dividend, after deciding to pull out of the US.

Party Gaming said that the decision would save it about 60m ($115m), some of which may be spent on acquisitions.

The firm derives 75% of its revenues from the US, said the move by the US Congress was a "significant setback".

US payments

However for World Gaming, the US represents 95% of its business, via the sites sportingbet.com, sportsbetting.com and betonusa.com.

World Gaming had been the worse hit by the new law, passed at the weekend, as its shares shed 76% on Monday.

In a surprise move the US Congress passed a bill cracking down on internet gaming, which would make it illegal to process online gaming payments from the US.

The move has forced gambling firms to reassess their plans, because US customers are a critical source of revenue.

And shares in UK-listed gambling sites that had plummeted on Monday experienced further losses on Tuesday.

'Attractive opportunities'

Firms have already hinted that they will look to focus on business outside the US, including looking at buying up other gaming firms.

"The board believes that cancellation of the interim dividend will allow the Company to take advantage of the many attractive opportunities in the sector that will emerge over the coming months", Gibraltar-based Partygaming said in a statement.

Earlier, the head of Sportingbet, another of the UK's listed internet gambling firms, said the British government was not doing enough to protect the industry in the US.

Nigel Payne told the BBC that the US move was simply "overt protectionism" against foreign firms in the sector.

Mr Payne said the bill would only hit non-US operators, as it would make it legal for US firms to take bets on the internet in the US.

"What in fact is happening is overt protectionism going on between the United States and the United Kingdom.

"And it's somewhat disappointing that the European Union and the UK government seem somewhat disinterested in protecting the UK companies."

Mr Payne added that the UK government had been "disappointingly silent" on the issue.

New rules mooted

Sportingbet's shares fell 64% on Monday, rival Partygaming dropped 58% and 888 Holdings tumbled by 26%.

They continued to fall on Tuesday, with Sportingbet closing 7.5% lower, while Partygaming lost 9%, and 888 Holdings shed 3%.

PERCENTAGE OF CUSTOMERS FROM US
Sportingbet: 50%
Partygaming: 49%
888 Holdings: 19%
Source: Comscore

It is expected that US President George W Bush could sign the bill into law within the next two weeks.

The US Treasury Department and Federal Reserve would then have nine months to suggest new rules.

Industry experts expect them to propose a so-called "coding-and-blocking system" that would prevent payment to gambling sites.




SEE ALSO
US gaming ban hits UK firms most
02 Oct 06 |  Business
New system will 'block' gambling
03 Oct 06 |  Business
New York judge frees gaming boss
29 Sep 06 |  Business
William Hill halts US gaming bets
27 Sep 06 |  Business
Sportingbet chairman held in US
07 Sep 06 |  Business

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