Senators' draft bill targets banks in attack on internet gambling

United States senators are preparing to launch a new attack on online gambling in a move that threatens to damage PartyGaming, the online poker company planning a £5.5bn float in London this month.

United States senators are preparing to launch a new attack on online gambling in a move that threatens to damage PartyGaming, the online poker company planning a £5.5bn float in London this month.

A bill being drafted by Jon Kyl, a Senator for Arizona and long-time opponent of internet gambling, seeks to ban credit card companies from dealing with online gaming groups in a bid to crack down on the rapidly growing industry.

As the US has no jurisdiction to challenge directly offshore internet gambling companies such as PartyGaming, which is based in Gibraltar, senators are trying to shut down the industry by stopping banks from handling all online betting transactions.

If the bill is successful, it would also hit other UK groups such as Sportingbet, which has two-thirds of its customers in the US.

Senator Kyl has the support of the powerful American Gaming Association (AGA), which represents land-based casinos.

Banning online casinos and internet betting would remove the biggest competitive threat to their businesses.

The move would also appease the World Trade Organisation, which earlier this year said the US was in breach of international trade agreements by preventing offshore gaming companies from targeting US customers while allowing some internet betting on its shores, such as on horseracing and online state lotteries. The WTO said the US must ban all forms of internet betting or open up its doors to foreign gaming groups.

However, competing interests in the US gambling industry may scupper the bill. It will be challenged by the equally powerful US horseracing industry, the Native Americans whose reservations are home to several gambling centres, and by state lotteries, which sell billions of dollars' worth of tickets online. They are set to demand exemption from the bill.

A spokesman for PartyGaming said: "There seems to be no combination of exemptions that would be acceptable to all those who have an interest in this bill. PartyGaming does not believe the current proposals will gain sufficient support to be enacted."

This is the eighth attempt by Senator Kyl to attack the online gaming industry in the US. Previous proposals have struggled to achieve political agreement.

The attack on banks follows attempts by the US Justice Department, which has already been pressuring institutions such as the Bank of America, Chase and American Express to stop handling internet betting transactions. The department has also issued threats to advertisers and media groups which have carried online gambling promotions.

News of the fresh assault on internet gambling comes as PartyGaming gears up to begin attracting potential investors. It is due to publish its listing prospectus later this week and investors will be scouring the document to assess the legal risks to the business.

The company maintains that online poker is not illegal in the US, only online sports betting.