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Online gaming stocks soared on Thursday after a bill being debated in US Congress attempting to ban internet gambling stalled.
PartyGaming, the world’s largest online poker site, saw shares rise as much as 13.3 per cent to 146¾p before falling back to 144p, or 11.2 per cent higher, in early afternoon trade. 888.com and Sportingbet, which also make up the UK’s three largest online gambling sites, were 11.6 per cent higher at 247p and 10.6 per cent at 425p respectively.
All three companies are based offshore but listed in the UK and generate most of their profit in the US. The shares have been highly volatile and subject to the uncertain legal status of online gambling in America. Telephone betting was banned in the US in 1961 and the Justice Department has already said that the law applies to the internet. However, this has allowed overseas-listed companies such as PartyGaming to cash in.
The Internet Gambling Prohibition Act, introduced by Republican senator Bob Goodlatte, is attempting to outlaw certain forms of online gambling along with separate bills from Senators Leech and Kyl that are also attempting to halt the use of credit cards to pay for online wagers on sites based overseas. In the debate on Wednesday, politicians were unable to resolve the debate over exemptions for certain gambling activities such as remote horse race wagers and highlighted the inherrent practical difficulties that banks would face trying to determine payments made to gambling sites.
“For the last month, people have taken a dim view of US legislation, so today’s news is welcome relief,” said Charles Wilson, analyst at Bridgewell Securities. “Without the threat of legislation, online gambling shares are significantly undervalued.”
“There’s still the Kyl bill to come,” he added, “but some of the risk has now been taken out.”
David Carruthers, chief executive of BetonSports, which specialises in sports betting, said on Wednesday that he did not expect the bills to succeed and that customers were already circumventing restrictions by using e-wallet solutions such as NETeller.
He added that he expected online gambling to be legalised within a few years.