Nearly four years after the U.S. outlawed online gambling, devastating British providers like PartyGaming, tax-hungry lawmakers could soon reverse the ban.
May 20, 2010: summarized from Bloomberg Businessweek -- London's online gambling giants, led by PartyGaming (PYGMF) and 888.com (EIHDF), are eyeing a return to the vast and lucrative market that dramatically shut the door on them three and a half years ago: the US.
When American lawmakers banned internet gambling in 2006, they cratered the share prices of companies which had built almost their whole businesses on offering online poker, casinos and sports betting to US customers from their offshore hubs, all funded from equity fundraisings on the London Stock Exchange.
But now there is optimism that the ban might be reversed. The reason? The same cocktail that brought Prohibition to an end during the Great Depression, a realization that the ban is not working mixed with the lure of tax revenues from a legalized industry.
PartyGaming is in negotiations with bricks-and-mortar casino operators in the US about possible joint ventures, should the laws be relaxed at a federal level or by individual states, and 888.com, too, is "staying close" to the American casino chain Harrah's Entertainment, with which it already has a tie-up in the UK. Other online sites, too, are ready to jump in with partnership deals or under their own brands, should the law change.
It was for this reason that executives across the industry were yesterday glued to a webcast of a sparsely attended hearing in the bowels of Congress, in front of the Senate's Ways and Means Committee. The event gave a hearing to the two lawmakers who are pushing for a reversal of the ban, testing the waters to see if there might be political momentum behind their idea.
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