Dublin Firm Wins US Gaming Contract

by Jason Gorringe, Tax-News.com, London

27 August 2002

Sports Spread, a specialist spread-betting firm based in Dublin, has won a USD20 million contract to manage the sports betting business of a number of US on-line casinos. The contract was awarded by Chartwell Technologies, a Nasdaq-listed company that provides gaming and information systems for Internet gambling companies. Profits from the on-line betting service will be split between the two companies, with Sports Spread getting 70 percent of the profits and Chartwell receiving 30 percent.

The on-line sports betting sector in the US is currently in a confused state. There is demand in plenty, but in many states, such as New York, on-line gambling is banned, and that's that, while in others, such as Nevada, it's legal within the state. Any kind of inter-state on-line betting is illegal under legislation known as the Wire Act.

On-line casinos in those states where they are legal have therefore to try to weed out customers from outside the state, not to mention under-age customers, and quite a large part of the software complexity of gaming systems is due to this legal aspect.

Offshore casinos and sports-betting sites may be legal in the jurisdictions where they are registered, but they cross the line as far as the US is concerned if they take bets from US residents. No-one knows how many of them ignore the law (with impunity as long as they don't visit the US), but the US authorities are trying to attack them through the providers they use.

In June the regulators scored the latest in a line of successes when Citibank, the US's largest credit card issuer, agreed to block online gambling transactions using its credit cards. Many operators have turned instead to on-line payment services, another boom sector on the Internet. But last week the New York Attorney General Eliot Spitzer reached a settlement with PayPal Inc. that will bar state residents from using the service to gamble online. PayPal allows individuals and businesses to send and receive online payments through credit card associations or electronic transfers from and to bank accounts, but last month, after the company agreed to be acquired by Internet auction giant eBay Inc, the writing was on the wall for its gambling clients.

EBay has already said that if its planned merger with PayPal is successful, the money-transfer service would no longer be associated with online gambling, but there are plenty of other services queueing up to take its place.

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