Shares in online gambling groups dipped lower yesterday after a bill aimed at stamping out the $12bn (£7bn) industry in the US cleared its first hurdle on its way through Congress.
London-listed shares in the poker giant PartyGaming and its rivals 888 and Sportingbet, which get much of their business from the US, were hit by up to 9 per cent in early trading after the US House of Representatives Committee on Financial Services approved a bill designed to ban the use of credit cards, cheques and electronic fund transfers for online gaming.
Online gambling companies are banned from operating in the US but those that are based offshore are out of reach of US laws.
The bill, one of three anti-online gambling initiatives, was introduced by the Representative Jim Leach. It would put the onus on banks and credit card companies to block money transfers going to offshore gambling sites. It has to pass a second committee vote before going to the Senate.
John Anderson, the chief executive of 888, said: "I think they will find it too difficult to push through." But he said he would seek to reduce the share of business 888 gets from the US from55 per cent to 20 to 25 per cent.
His comments came after 888 unveiled maiden results above analysts' expectations. Underlying pre-tax profits jumped almost 60 per cent to $65m as players of casino games rose 28 per cent to 4.1 million, while poker players more than doubled to 1.5 million.
It also emerged yesterday that the flotation of the online casino software developer Playtech has been more than five times covered at a price of about £2.60 a share, valuing the group at more than £550m. Playtech plans to raise £175m through the float.
Another US prohibition bill, proposed by the Republican Senator Bob Goodlatte who has tried and failed to get similar bills through in the past, seeks to amend the Wire Act, which makes gambling over telephones illegal, to include internet gaming.
Other online gambling operators such as Sportingbet have pointed out that the prohibition bills sit awkwardly with the US stated policy on internet matters, and believe the bills might not get full debating time in a year shortened by senatorial elections in November.
Sportingbet believes this year presents the last chance for the anti-gaming lobby in the US before it has to admit defeat. Analysts said the odds are on the latest initiative failing.
Online gaming firms recovered to reverse most of their early losses. PartyGaming closed down 0.4 per cent at 120p, after an earlier fall of 8.7 per cent; 888 closed up 0.8 per cent at 181p, after an earlier drop of nearly 5 per cent.Reuse content