Billions of pounds were wiped off the value of online gaming stocks today after a controversial move to prevent internet gambling in the United States.
Shares in the sector tumbled by as much as 80% as investors reacted with dismay to new laws in the US which ban banks and credit card companies from processing payments to online casinos.
The legislation was a major blow for firms such as Party Poker owner PartyGaming and 888 Holdings, which rely heavily on the US for business.
The two companies said today that they will suspend business in the US indefinitely once President George Bush signs the Bill into law - a move expected within two weeks.
Shares in PartyGaming tumbled 61% while 888 was down 45% and Sportingbet was off 70%. World Gaming plummeted 80% after it was also hit by the end of takeover talks with Sportingbet, and online money transfer company Neteller fell 60%.
The Unlawful Internet Gambling Enforcement Act effectively stops anyone in the US from placing bets on the internet even if the casino is based overseas, although it does not include horseracing and state-owned lotteries.
Online gaming firms have been under pressure all year from the threat of harsh legislation in the US, although most analysts thought Congress would not have time to approve the Bill.
However, the measures were attached at the last minute to an unrelated Bill aimed at enhancing port security, which was passed on Saturday.
It followed the recent arrests of BetonSports chief executive David Carruthers and Sportingbet chairman Peter Dicks in the US over alleged illegal internet gambling on sport under current laws.
888 said today that the new law would treat internet gaming, "whether sports-related or not, as illegal".
"In the light of these considerations the board has concluded that it is appropriate to suspend participation by US-based customers in activities covered by the legislation," 888 said.
"The company will implement this suspension immediately upon the legislation taking effect and the suspension will continue for so long as the legal situation remains the same.
"The board will continue to seek clarification of the overall US legal position to determine whether and to what extent if any resumption of participation by US customers is feasible."
Last month 888 revealed that 52% of its revenues came from the US, while PartyGaming has around 75% of its business in America.
PartyGaming also said it would halt operations in the US "indefinitely" once the Bill becomes law.
Chief executive Mitch Garber said: "This development is a significant setback for our company, our shareholders, our players and our industry."
Sportingbet said it was "disappointed" by the decision in Congress to back the Bill, which it said would have "a material impact" on trading.
Sportingbet, which generates 62% of its income in the US, also pulled out of talks to buy rival firm World Gaming because of the new law.Reuse content