Wow, this took me by surprise!
ITraders said the markets were taken by surprise when the 'Unlawful Internet Gambling Enforcement Act' was unexpectedly rushed through by Congress on Saturday.
The bill prohibits banks and credit card firms from processing Internet gaming payments from customers in the United States.
Shares in British firm PartyGaming -- the world's biggest online gambling company -- were down 55 per cent in afternoon trading in London Monday as a result of the legislation.
Canadian software firm Cryptologic, which announced last week it will move its head office from Toronto to Dublin, also saw its shares slump Monday during morning trading on the Toronto Stock Exchange.
Other Canadian companies involved in the industry found their stock similarly stricken by the news, including Las Vegas From Home.com and Internet Bingo firm Parlay Entertainment Inc.
Meanwhile, Britain's Sportingbet, which does more than 60 per cent of its business in the U.S., said it called off takeover talks with World Gaming, while shares in rival 888 Holdings tumbled by more than 30 per cent.
"This legislation indicates Congressional intent to treat Internet gaming, whether sports-related or not, as illegal," 888 Holdings said in a statement.
Several firms have said they will stop taking bets from U.S. customers if the bill is signed into law by U.S. President George Bush in the next two weeks.
Hardest hit companies
The companies hit hardest by the ruling are those that offer betting markets denominated in U.S. dollars, and usually operate from bases in the Caribbean or Central America.
Most of the big British and Irish sites, by contrast, keep their operations in Europe and take deposits only off credit cards denominated in pounds and euros.
The legislation, if enacted, "will make it practically impossible to provide U.S. residents with access to its real money poker and other real money gaming sites," PartyGaming said.
The legislation -- part of a sustained clampdown on online gambling in the U.S. -- was attached to an unrelated bill aimed at improving port securities.
The bill was passed by both the House and Senate on Saturday morning.
Hailing the new legislation, Senate Majority Leader Bill Frist told reporters that gambling was "a serious addiction that undermines the family, dashes dreams, and frays the fabric of society."
House Majority Leader John Boehner said the new law was a key advance for Republicans' "American Values Agenda" ahead of the mid-term election.
Arrests
The move follows the arrests in the U.S. this year of the bosses of two foreign online companies over alleged illegal Internet gambling.
"This has come as a major shock to the industry, where most observers expected the legislation to fail," Stephen Ford, an analyst for British broker firm Collins Stewart, told the Associated Press.
"It also comes as a major shock to the stock market and unsurprisingly stock prices have fallen significantly across all online gaming stocks exposed to the U.S."
Some analysts insisted they were remaining upbeat about the gaming sector.
"Obviously the share prices have collapsed and they're discounting all the U.S. business but I think there is still a lot of non-U.S. business there and it is not as if these companies are going to disappear," Richard Carter, of Numis Securities, told AP.
The online gaming business last year generated around US$15 billion globally.
The U.S. Department of Justice claims online gambling violates the 1961 Wire Act -- legislation which was aimed at fighting organized crime.
The legislation outlaws the use of phone lines to place bets across state lines.
ITraders said the markets were taken by surprise when the 'Unlawful Internet Gambling Enforcement Act' was unexpectedly rushed through by Congress on Saturday.
The bill prohibits banks and credit card firms from processing Internet gaming payments from customers in the United States.
Shares in British firm PartyGaming -- the world's biggest online gambling company -- were down 55 per cent in afternoon trading in London Monday as a result of the legislation.
Canadian software firm Cryptologic, which announced last week it will move its head office from Toronto to Dublin, also saw its shares slump Monday during morning trading on the Toronto Stock Exchange.
Other Canadian companies involved in the industry found their stock similarly stricken by the news, including Las Vegas From Home.com and Internet Bingo firm Parlay Entertainment Inc.
Meanwhile, Britain's Sportingbet, which does more than 60 per cent of its business in the U.S., said it called off takeover talks with World Gaming, while shares in rival 888 Holdings tumbled by more than 30 per cent.
"This legislation indicates Congressional intent to treat Internet gaming, whether sports-related or not, as illegal," 888 Holdings said in a statement.
Several firms have said they will stop taking bets from U.S. customers if the bill is signed into law by U.S. President George Bush in the next two weeks.
Hardest hit companies
The companies hit hardest by the ruling are those that offer betting markets denominated in U.S. dollars, and usually operate from bases in the Caribbean or Central America.
Most of the big British and Irish sites, by contrast, keep their operations in Europe and take deposits only off credit cards denominated in pounds and euros.
The legislation, if enacted, "will make it practically impossible to provide U.S. residents with access to its real money poker and other real money gaming sites," PartyGaming said.
The legislation -- part of a sustained clampdown on online gambling in the U.S. -- was attached to an unrelated bill aimed at improving port securities.
The bill was passed by both the House and Senate on Saturday morning.
Hailing the new legislation, Senate Majority Leader Bill Frist told reporters that gambling was "a serious addiction that undermines the family, dashes dreams, and frays the fabric of society."
House Majority Leader John Boehner said the new law was a key advance for Republicans' "American Values Agenda" ahead of the mid-term election.
Arrests
The move follows the arrests in the U.S. this year of the bosses of two foreign online companies over alleged illegal Internet gambling.
"This has come as a major shock to the industry, where most observers expected the legislation to fail," Stephen Ford, an analyst for British broker firm Collins Stewart, told the Associated Press.
"It also comes as a major shock to the stock market and unsurprisingly stock prices have fallen significantly across all online gaming stocks exposed to the U.S."
Some analysts insisted they were remaining upbeat about the gaming sector.
"Obviously the share prices have collapsed and they're discounting all the U.S. business but I think there is still a lot of non-U.S. business there and it is not as if these companies are going to disappear," Richard Carter, of Numis Securities, told AP.
The online gaming business last year generated around US$15 billion globally.
The U.S. Department of Justice claims online gambling violates the 1961 Wire Act -- legislation which was aimed at fighting organized crime.
The legislation outlaws the use of phone lines to place bets across state lines.
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