PokerStars defies US ban and risks RBS withdrawal
PokerStars, the world's second-biggest internet poker company after PartyGaming, is to carry on with business as usual despite the United States Congress's decision to outlaw internet gaming across the country.
After taking legal advice, PokerStars has concluded that the Unlawful Internet Gambling Enforcement Act does not apply to online poker. Flying in the face of the opinion of American legislators and the wider internet gaming industry, the company asserts that poker is a game of skill, not chance, and therefore not covered by the new law.
A statement on PokerStars website said: "PokerStars has ... concluded that these provisions do not alter the US legal situation with respect to online poker... The Act does not in any way prohibit you from playing online poker. Therefore our business continues as before - open to players worldwide including the US. You may play on our site as you did prior to the Act."
Royal Bank of Scotland, which is widely believed to provide payment-processing functions to PokerStars, may drop it as a corporate client after the statement. RBS declined to discuss specific clients, but said that it would do whatever is necessary to comply with the new legislation. That could lead to severing some relationships with clients, RBS said.
It emerged yesterday that RBS and Barclays are contacting clients to evaluate the extent of their involvement in online gaming in the US. Barclays, too, declined to comment but is understood to have already written to major clients. Others will be contacted within the week.
Barclays is not looking to sever ties entirely with clients conducting internet gaming business across the Atlantic, but it will not take deposits originating there. The bank will continue to take proceeds from activities outside the US by filtering revenues using such factors as credit card numbers or addresses.
The industry warns that the Act, to be signed into law by President Bush at midday in America today, will not end online gaming but will drive it underground. A spokesman for PartyGaming said: "Prohibition has never worked. Regulation does. It [the Act] will strip away protection for consumers... as easily as a flame thrower can remove paint."
The law scuppered PokerStars' plans for a £1.6bn flotation in London early next year.
Bankers at HSBC and Dresdner Kleinwort had been working towards bringing the company, which is 75 per owned by the Israeli Scheinberg family, to investors in the spring. A flotation is not now expected until 2008, if at all. Like its rivals in the sector, PokerStars derives the lion's share of its revenues from its sales in the US. No precise breakdown has ever been given by the company, but as much as 80 per cent of PartyGaming's revenues come from there as do about 52 per cent of 888's sales.
PartyGaming, the wider industry and investors have taken the view that the Act does indeed capture online poker. More than £3bn was wiped off the market value of London-listed gaming companies in a single day after Congress unveiled its plans.
- 1 BBC election debate: The one photo that summed up the whole 90-minute leaders debate
- 2 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 3 18th century sex toy found in 'toilet of sword fighting school' in Poland
- 4 'I wish my teacher knew...': Young students share their 'heartbreaking' worries in notes
- 5 Rebecca Francis accuses Ricky Gervais of using 'influence' to target female hunters after receiving barrage of death threats
General Election 2015: David Cameron catching up in polls – but he badly needs a clear lead
South Africa xenophobic attacks: Shops looted and violence on streets of Johannesburg as foreigners are forced to hide in police stations
Earthworms rain down from skies over Norway, puzzling scientists
18th century sex toy found in 'toilet of sword fighting school' in Poland
'I wish my teacher knew...': Young students share their 'heartbreaking' worries in notes
The only black face in the Ukip manifesto is on the page about overseas aid
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
Ukip is the only main political party to not address LGBT rights in its manifesto
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
General Election 2015: Polish prince challenges Nigel Farage to a duel over immigration question
iJobs Money & Business
£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...
£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...
£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...
£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...