The Internet gambling industry was left reeling this weekend when the U.S. Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA) after a late-night negotiating session saw it attached to H.R. 4954, an unrelated Homeland Security bill aimed at increasing security at U.S. ports. Since the news broke, several industry players have responded to the new legislation.
*All references to "the legislation," "the law," and "the Act" in the subsequent quotes refer to UIGEA.
*This article will be continuously updated as more statements are made available. New statements will be marked with stars.
**FireOne, payment processing provider for the online gaming industry.
"On Oct. 2, the Company made an announcement regarding the passing of the Unlawful Internet Gambling Enforcement Act of 2006 by the United States Congress. The Company today announces that following the approval of the Act by the President of the United States, it will immediately cease to process settlement transactions originating from United States consumers that may be viewed as being related to online gambling.
"As previously announced, upon becoming law, the Act will have a significant negative impact on the business and results of operations of the Company, and, consequently, the Company has embarked upon a restructuring of its operations and cost base.
"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, and will consider additional card-not-present payment processing opportunities outside of online gambling."
"The Justice Department has been very clear that it believes online gaming to be illegal in the United States and our policies have been always been tailored accordingly," said Adam Pliska, general counsel of WPTE. "This law clarifies the rules and makes it possible for everyone to move forward on an even footing."
The Poker Players Alliance (PPA), a grassroots, nonprofit, pro-poker lobbying organization based in the United States.
"This last minute deal reeks of political gamesmanship. The American people should be outraged that Congress has hijacked a vital security bill with a poker prohibition that nearly three fourths of the country opposes," said Michael Bolcerek, president of the PPA.
"Allowing this bill to become law, would run contrary to public opinion and would damage an already fractured relationship between government and the electorate. The millions of Americans who enjoy playing this great game will have the last voice in this debate come Election Day."
Empire Online, owner of Noble Poker.
"In light of the new legislation passed by the U.S. Congress last Friday, Empire Online has immediately commenced a review of the likely impact on the Company's current business activities. Presently it is difficult to assess the exact effect of this legislation, which could have a material impact on future earnings. The Board of Empire Online will continue to take counsel from its advisors on this matter and will update shareholders accordingly."
In a statement released to the press yesterday, the leading Internet gambling software developer said WaterLogic's licensees would no longer be taking bets from U.S. customers, effective immediately. The company saw its shares drop 20% following this announcement.
Lewis Rose, CryptoLogic's president and CEO, said:
"Since 2001, CryptoLogic has been shifting its business to Europe, and our record revenue and earnings in 2005 and 2006 to date flow from our success in the markets that embrace Internet gaming. While the new U.S. developments will be a challenge for the whole industry, our company's diversification, strong balance sheet, thriving European customers and potential new business in emerging markets enable us to face the future with confidence.
"We believe Internet gaming can and should be regulated, licensed and taxed. The U.K. model is the right one: create a safe, secure and regulated environment for players to enjoy this form of entertainment. We will continue to advocate regulation as the logical solution for all stakeholders, including players, investors, and governments. In the meantime, we will continue to deepen our existing relationships and attract potential new customers in Europe, Asia and other thriving and emerging markets."
The firm last week revealed its intention to transfer its base of operations from Canada to Ireland, and switch its main stock market listing from Toronto to London. CryptoLogic is proceeding with its plan to locate its global headquarters in Ireland, with continued commitment to its operations in Canada, the United Kingdom, Cyprus and Singapore.
NETeller, Inc., an online payment solution firm which is widely used by Internet poker and casino game players when transferring money to online gambling venues.
"The Company, in conjunction with its advisers, is considering the potential impact of the Act at this time. The Board believes that the Act may have a material adverse effect on NETeller's U.S. facing business. Once the Company has more information about what the regulations will stipulate, it will have a clearer view of which companies are affected, how those companies will be expected to comply, and any possible resulting impact on the Company.
"In the meantime, the Company will continue to monitor the progress of this legislation and to energetically plan and adapt NETeller's business to minimize any potential adverse impact. The Company will remain focused on developing its business in line with its stated strategic objectives including geographical and product diversification."
Shares in NETeller dropped 63% following this announcement.
Playtech Limited, provides a platform to several poker sites, including CD Poker and Noble Poker. It is listed on the London Stock Exchange.
"The Board of Playtech states that it continues to receive legal advice regarding the impact of this legislation. Whilst Playtech is not an operator of online gaming nor a payment processor, the Board accepts that if this legislation becomes effective there would be a material impact on certain of its licensees and therefore on Playtech's revenues.
"However, in the first half of 2006 more than 50% of Playtech's revenues were derived from non-U.S. players, a figure that is steadily increasing as the Company continues to add more new non-U.S. facing licensees.
"Playtech is actively growing its revenue base in Asia, Europe and South America where the Board believes it has substantial business development opportunities. Playtech's current new business and development pipeline, including commissioned products, is entirely focused on these non-U.S. markets as are all new licensees."
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