Anti-egaming bill hits early hurdles

[Sean]

Posted: 6/4/2006
www_egrmagazine_com

Anti-egaming bill hits early hurdles
Online gaming shares received a hefty shot in the arm in early trading today amid talk that the latest attempt to strengthen prohibition of online gaming in the US had hit significant opposition.
At one point on Thursday, PartyGaming’s share price was up over 9% to 141.5p, while Sportingbet was up 28p or 7% to 408.5p and BetonSports gained 5.75p or 3.85% to 155p. Online payments company Neteller, meanwhile, saw its share price benefit as well, rising 8.7% or 64.5p to 805.5p at one point.

Representative Robert Goodlatte’s Internet Gambling Prohibition Act (HR 4777) was reported to have met with a lack of support when it came before a House Judiciary crime sub-committee yesterday, April 5.

Representative Bobby Scott slammed Goodlatte’s bill as attempting to create “an enforcement nightmare for financial institutions”. His comments were backed by First State Bank vice-president Sam Vallandingham who said the added burden of having to monitor transactions for online gambling would be too much for the banking industry.

Analysts noted the sub-committee session had also highlighted the confusion amongst the bill’s proponents over possible carve-outs for activities such as online wagering on US horseracing.

Greg Feehely, head of research at Altium Capital, noted that no vote was taken and that no second hearing had been scheduled, meaning there would be up to a two week delay.

“Overall, industry watchers noted that opponents of the bill were said to have been quite pleased with yesterday’s hearing,” he added. “The fact there is confusion on carve-outs and delays is fantastic news.”

[SBR_John]

I'd short those gaming stock rallies. This bill is not done. They will start the process of watering it down.

[RickySteve]

There aren't any remotely plausible means by which Congress could prevent US citizens from gaming online. This bill naively attempts to stem the flow of money from US banks. The banking industry would NEVER NEVER NEVER allow the government to impose upon them the staggeringly enormous burden of monitoring every transaction for gaming activity. There is no bigger lobby than the banks. Assuming Congress completely ignores popular opinion against the bill(who cares what the people want anyway?), passing this bill would be a major kick in the balls to a chief revenue source.

And let's even assume the law does pass, in some 8-dimensional alternate universe. There would ALWAYS be ways to circumvent it. Sportsbooks would quickly get very creative in setting up fronts to move money which would take thousands of full-time investigors to root out and figure out how to combat. It would create another drug war, flushing countless billions down the toilet with no gain. They're turning a hugely +EV opportunity to regulate & tax internet gaming into another black hole for public funds.

[Dark Horse]

F*cking idiots look Goodlatte should pay for their own salaries rather than wasting tax payers money.

[SBR_John]

There aren't any remotely plausible means by which Congress could prevent US citizens from gaming online.

True, but this is an election year so they will water the bill down to please everyone and pass it. Then they go back to their districts and claim they saved the children from satan himself.

[JC]

As I posted at MW:

While yesterday's news is encouraging, don't pop the champagne yet.

There are still two live bills in the House and Kyl always lurking in the Senate. Kyl, Goodlatte, Leach and their followers are not beyond attaching it to some other bill while nobody is watching. They will also keep pressing to have their bills brought to full committee and floor votes.