Online casinos moving to Caribbean after U.S. ban

Online casinos flee U.S. ban for islands

LONDON—A looming U.S. ban on Internet gambling is already scaring off London-listed operators, but the industry will continue to thrive in the hands of private operators in locations like Costa Rica, Antigua and Curacao.

The fear of extradition to the United States has forced executives in the United Kingdom to turn away from their most lucrative market, some selling their U.S. operations to counterparts in and around the Caribbean which have less amenable extradition treaties with the United States.

Sportingbet CEO Nigel Payne this week reassured Antiguans the company would not downsize its operations there and is in talks to sell its U.S.-focused business to a private firm.

Leisure & Gaming's U.S operations VIP and Nine.com are also likely to end up in private hands, with sale talks underway.

Analyst Tejinder Randhawa at Evolution Securities said the industry was splitting into two camps: the European-listed companies and those elsewhere looking to exploit the U.S. ban.

"The market will not go cold-dead overnight," he said. "There are huge opportunities, and all the private offshore operators are licking their lips."

U.S. Congress passed a bill to outlaw online gambling this month, with President George W. Bush expected to sign it into law today. Many U.K. companies immediately announced plans to pull out, wiping $7 billion (U.S.) off their shares.

"U.S. gambling is untenable for London-listed companies, but these U.S. operations are all viable and profitable businesses that have a future," said a source close to Leisure & Gaming.

The U.S. ban will also make it illegal for banks and credit-card companies to process payments to online gaming companies. "But no doubt there will be operators that spring up to handle the payments," said Randhawa.

About 170 websites have declared their intention to stop accepting U.S. players, the vast majority since Congress passed the act, according to gaming website Casino City, which expects 10 per cent to 15 per cent of the world's 2,700 or so gaming websites to eventually block U.S. customers.






Online casinos moving to Caribbean after U.S. ban

LONDON (Reuters) - A looming U.S. ban on Internet gambling is already scaring off London-listed operators, but the industry will continue to thrive in the hands of private operators in locations like Costa Rica, Antigua and Curacao.

The fear of extradition to the United States has forced UK executives to turn away from their most lucrative market, some selling their U.S. operations to counterparts in and around the Caribbean which have less amenable extradition treaties with the United States.

Sportingbet's Chief Executive Nigel Payne this week reassured Antiguans the company would not downsize its operations there and is in talks to sell its U.S.-focused business to a private firm.

Leisure & Gaming's (L&G) U.S.-facing operations VIP and Nine.com are also likely to end up in private hands, with sale talks underway.


Analyst Tejinder Randhawa at Evolution Securities said the industry was splitting into two camps: the European-listed companies and those elsewhere looking to exploit the U.S. ban.

"The market will not go cold-dead overnight," he said. "There are huge opportunities, and all the private offshore operators are licking their lips."

U.S. Congress passed a bill to outlaw online gambling this month, with President George W. Bush expected to sign it into law on Friday. Many UK companies immediately announced plans to pull out, wiping $7 billion off their shares.

"U.S. gambling is untenable for London-listed companies, but these U.S. operations are all viable and profitable businesses that have a future," said a source close to L&G.

The U.S. ban will also make it illegal for banks and credit card companies to process payments to online gaming companies. "But no doubt there will be operators that spring up to handle the payments," said Randhawa.

About 170 Websites have declared their intention to stop accepting U.S. players, the vast majority since Congress passed the act, according to gaming Web site Casino City, which expects 10 to 15 percent of the world's 2,700 or so gaming websites to eventually block U.S. customers.


By contrast, privately-owned operators in and around the Caribbean, which moved there years ago to avoid prosecution in the United States, are unfazed by the laws.

Calvin Ayre, the billionaire founder of Costa Rica-based Bodog.com, told Reuters: "We're confident that we've structured our business in such a way that we'll have no problems adapting .. If anything, the pending legislation has validated our broad-based digital entertainment model and our decision to stay private."

Executives from both BETonSPORTS and Sportingbet have been arrested this year on illegal gambling charges filed by individual U.S. states while travelling through the country.

Most UK gambling executives now avoid going there, but they also fear extradition to the United States if they break U.S. federal law after the ban.

The vulnerability of British executives was illustrated by the recent extradition of the "Natwest Three" bankers involved in the Enron case.

The three were extradited without British government intervention under a 2004 treaty originally designed to speed up extradition of terror suspects.

"All the UK government has done is open its doors and say to the Americans: come and get anybody you like," BETonSPORTS non-executive director Robin Glentoran was recently quoted saying in a newspaper interview.

But while Sportingbet, Leisure & Gaming and several others look set to offload their U.S. operations into private hands, some will retain them even if those operations are suspended.

Unlike most, 888 Plc owns its gambling software and might have trouble splitting away the U.S. players together with the hundreds of support staff needed to service them, gambling sources said. 888 declined to comment.

Sector leader PartyGaming is still keeping its cards close to its chest, but spokesman John Shepherd said the ban risks forcing the Internet gambling industry underground.

"The protection afforded to millions of Americans by responsible companies is just about to be stripped away," he told the GamCare conference this week.







Online Casinos Going Underground in US?

Many public companies associated with the thousands of online casinos have a crucial decision to make very soon, as the days that they are allowed to live in a bubble are numbered. There is no way around the fact that the US legislation presents online casinos with a choice they must deal with: Either continue to take American bets and possibly face charges of money laundering or aiding criminal activities, or suspend and even close US operations in order to try and recover in other online casino gambling markets.

The public companies are most affected by the US legislation, and the fact that is blatantly disregarded by the US government is that the high profile companies may suffer heavy losses, and even take their business elsewhere, but there is absolutely no way to stop American Gamblers from gambling at the online casinos. They will most likely find a way to wager on their favorite sports team and on a winning hand of Poker. By choosing to go down the road of shunning away the online casinos instead of regulated the industry, legislators are risking pushing the industry to the underground, where those who decide to pay or deny payments from players will be faceless private online casino companies whose ownership will be impenetrable.

eCOGRA, an independent standards authority in the online casino industry, also addresses the issue of under funded, unregulated and unprincipled gambling sites filling the space left by the bigger, high profile companies. The danger is eminent, a fact that should, but most likely won't, convince Bush to reconsider signing the bill into law.




eCOGRA Fears Unregulated Online Casino Gambling

eCOGRA, an independent standards authority in the online casino industry, responds to the recent developments regarding the ban on online casino gambling in the US. The non-profit "Seal of Approval" distributor sees the recent legislation as a possible danger, threatening players that may decide to gamble at underfunded, unregulated and unprincipled gambling sites filling the space left by the bigger, high profile online casinos.

The standards authority addresses this issue and calls for onlines casinos who have not jumped on the eCOGRA wagon to accept its standards and understand the importance of consistent and monitored standards for professional online casino operations, all to ensure that online casino players receive a fair gaming experience and good customer service.

They have been awarding "Play it Safe" seals to online casinos who have acted responsibly and urge them to continue to do so in the current circumstances. Until the present time, 21 well established and quality online poker rooms and 91 online casino sites operated by some of the largest and most successful business groups in the industry bear the eCOGRA "Play It Safe" seal, which assures players of fair games and efficient treatment. As a non-profit organization, eCOGRA is seemingly objective when it, too, calls for the regulation of online gambling, and sees it as a far more effective and safe method of action than the attempt to prohibit gambling.