The government's move has triggered threats of legal action from gaming industry players who are now forced to radically adjust or even dump their operations. The most high-profile victims are those who launched online operations after May 19 2000, the day from which the moratorium took effect. The government will decide next May whether or not to ban Internet gambling outright.

Racing and sporting events are exempt under the new deal. Although eBet Ltd, whose gambling operation is mostly sport and racing wagering, says it stands to gain from the moratorium, it is the only one to do so. Companies such as My Casino Ltd are relying on their Vanuatu-based activities to keep them afloat. Following the moratorium decision, My Casino issued a statement in which it clarified it position. An Australian-based company, it has a wholly-owned subsidiary in Vanuatu, which is registered, operated and managed from the the South Pacific tax haven.

The statement said: 'The company in Vanuatu has been issued with Gaming and Sportsbook licences for a period of ten years and is not affected by the Australian legislation. My Casino Ltd will continue to operate and grow its business through its wholly owned Vanuatu-based company by means of expanding its player base and forging strategic alliances in the international gaming industry for the benefit of both clients and shareholders.'

Another online gaming concern, Lasseters Holdings, hinted that it might make major changes to its operations, and a move offshore seems more than likely, Vanuatu being the obvious choice. The company, which has operated online for 18 months, said the moratorium significantly threatened its international competitiveness. Peter Bridge, Lasseters' managing director, commented: 'To change our site to reflect its status in May will lose seven months of continual development. As responsible operators, we will comply with the moratorium. But we will be looking at all our alternatives to ensure Lasseters Online can continue to grow.'