Update - December 2006
The Unlawful Internet Gambling Enforcement Act, signed into law by President Bush on October 13, 2006, dealt a potentially fatal blow to the online gambling industry's business within the United States. Passed by Congress as part of a port-security bill, the act makes it illegal to place bets online using credit cards or electronic transfers. The bill also includes a measure that will prohibit banks, credit card companies and other financial institutions from processing payments for online wagers, pending the development of regulatory procedures by the Treasury Department and the Federal Reserve.
The impact of the act on Internet gambling companies was immediate. It spelled the loss of this global industry's largest market; an American customer base that spent an estimated $6 billion gambling online in 2005 (Christian Capital Advisors, LLC). The New York Times reported the stocks of publicly traded Internet gaming companies on the London Stock Exchange have lost an estimated $7.6 billion in value since the act's passage by Congress. PartyGaming, the parent company of the largest Internet poker site in the world, PartyPoker.com, watched its shares fall by 58 percent in the first day of trading alone.
PartyGaming and many larger companies suspended operations in the United States soon after the bill passed. In a letter to its customers, PartyGaming wrote, "The new law will make it practically impossible to provide U.S. players with access to PartyGaming's real money poker and other real money gaming sites." While U.S. residents can no longer bet real money on PartyGaming's sites, the opportunity to wager their money in virtual poker rooms has not disappeared altogether. Some small, private companies are still letting them in on the game, capitalizing on the large, public enterprises' wariness to skirt the law.
This will likely not be the end of the legislative fight over online gambling. Major companies like PartyGaming have yet to let the American market out of their sights, and are pushing for a legalized and regulated environment in the United States. On the other side of the screen, an organization called the Poker Players Alliance is campaigning for an exception for poker to be included in the law. In a letter to its members the Alliance writes, "We continue to demand that poker receive separate treatment from other forms of gaming. It is a game of skill, where performance is merited, and a community game, where the house is not your competition."
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