Scottish gambling tycoons hit hardest as United States goes poker straight

Published on Sunday 8 October 2006 01:24

WHEN Congress banned online gambling in the USA last week, in one fell swoop they declared economic war on Britain while simultaneously ending the notion of cyberspace as a "government-free" territory.

It is estimated that British-owned online gambling companies who specialise in poker - a game 50 million Americans play regularly either in person or on the worldwide web - lost 75 per cent of their revenue overnight when the Unlawful Internet Gambling Enforcement Act of 2006 was passed.

Shares in companies such as PartyGaming, SportingBet and 888.com - many of whose managers are Scots - plummeted, while shares in UKBetting, which specifically avoided doing business in the USA over fears of online gambling's legality, rose by 11 per cent.

President Bush has still to sign the bill into law, but he actively supported it and with mid-term elections due, there is little chance of the president turning down something which appeases the vital right-wing Christian "moral majority". Many state governments were also worried about the effect that online gambling was having on income for their lucrative lotteries, so even liberal governors are happy with this Draconian move.

But Congress's decision reeks of hypocrisy, not least because now American teenagers cannot smoke, drink or play poker online, but they can own guns in some states and they can certainly die for their country in Iraq. The US government formally protested when China started censoring American-based internet search engines, but by using the device of stopping payments to internet gambling companies, they have effectively made the Federal government an internet policeman as far as gambling is concerned.

Congress also allowed a curious exemption. Online betting on horse racing is still allowed, and that could be good news for the British racing and betting industries, including betting exchanges.

A spokesman for one betting exchange operator said: "Exchanges could see this ban coming, as our own legality and existence has been challenged there. It seems like a disaster for those firms who dealt mostly in online poker, but the exemption for horse racing could be very good news for British racing and online bookmakers as well as exchanges. If the industry gets its act together, there could be a big future in broadcasting our racing to the USA and taking bets online from over there. After all, we now know they're legal.

"You can now see American racing on satellite television here in the UK and bet on it every night, so why not do it vice-versa and have Americans betting on our racing?"