Plans by the Gibraltar-based online poker company to float on the London Stock Exchange are under threat from a new bill being drafted by Arizona Senator Jon Kyl which seeks to ban credit card companies from dealing with online gaming groups in a bid to crack down on the rapidly growing industry.
While online gambling is illegal under US law, Congress has no jurisdiction to directly challenge offshore-based internet gambling companies such as PartyGaming, and the proposals being drawn up by Kyl, a long-time opponent of gambling on the internet, will attempt to shut down the industry by stopping banks from handling all online betting transactions.
The bill is being backed by the American Gaming Association, which represents the domestic commercial casino entertainment industry. However, it is likely to be opposed by various other gambling interests in the US, such as the horseracing industry, Native American groups whose reservations are home to several gambling centres, and by state lotteries, which sell billions of dollars' worth of tickets online - unless they are exempted from the new legislation.
PartyGaming, which claims to control about 55% of the global online poker market, is said to be worth $1.5 billion. The company recently admitted that 90% of its revenues are derived from US customers. However, If successful, the bill will have industry-wide ramifications; sites based in the Caribbean, Gibraltar, and other areas attract large numbers of US punters.
Nonetheless, a spokesman for PartyGaming indicated that the firm is not overly concerned by the latest attempt to ban online gambling in the US, noting that previous attempts have all failed to make it onto the statute book.
"For the past eight years certain members of congress have tried to introduce proposals that would seek to prohibit US citizens from wagering on the Internet. In each case they have failed," Edward Bridges told Bloomberg News.
A comprehensive report in our Intelligence Report series examining offshore e-commerce and online gaming is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report6.asp
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