Online payment processing company FireOne is feeling the burn of the new U.S. Unlawful Internet Gambling Enforcement Act (UIGEA), posting serious third-quarter losses this year.
The firm recorded a net loss of $72.4 million, or $1.40 per share, in the third quarter ending Sept. 30, compared to last year's profits of $5.6 million from its FirePay e-wallet services. FireOne CEO Ben Dalfen blames the loss on the Oct. 13 UIGEA, which disallows companies to process U.S. transactions for online gambling.
About 85 per cent of the company's profits come from online gamblers in the U.S. but upon the bill's enactment, FireOne stopped processing transactions from U.S. customers.
"As a result of the enactment of the Act, our revenues will be significantly less than our historical revenues," said Dalfen in FireOne's third-quarter report. "The company has embarked on a restructuring of its operations and cost base."
Restructuring costs are estimated at $1.5 million and will be recorded in the fourth quarter of this year.
"In spite of recent events, the Company will continue to offer its multi-currency credit and debit card and FirePay electronic wallet processing to the online gambling industry originating from non-U.S. consumers and not prohibited by the Act," said Dalfen. "The Company is currently evaluating its opportunities and will continue to update shareholders as and when appropriate."