The Odd Couple: Alienware & the Phantom

Where would this blog be without Infinium Labs? The soap opera just won't die. On Monday, Phantom Entertainment (aka Infinium Labs, the company that never brought you the Phantom console) announced that Alienware has ordered the Phantom Lapboard for its PC gear product line & Media Center PCs.

The Phantom Lapboard is a wireless keyboard & laser mouse combo that enables users to work or play games up to 30 feet away from your system. Check out a quick demo from this month's DigitalLife conference:



This is (shockingly) good news for 2 reasons. First off, it appeared the November launch was in jeopardy. In an interview last week, CEO Greg Koler indicated that the Lapboards had not yet been manufactured. Second and most important, this is the first time in 2 years that Phantom Entertainment has partnered with a legitimate, well-respected company. Alienware is one of the most popular gaming manufacturers in the business; so popular, in fact, that it was bought out by Dell Computers earlier this year in a deal exceeding $1 billion. Alienware moves product, and including the Lapboard with its gaming machines means plenty of potential revenue for Phantom Entertainment.

From an investing point of view, this may be an excellent risk/reward play with PHEI's stock down 90% (not a mistype) for the year. The stock is priced with the expectation that Phantom Entertainment will not survive into 2007 (much less ever launch a product). If the Lapboard hits the shelves in the coming weeks, $.02 should be an easy target.

Although this is appears to be great news for Phantom Entertainment, as always we'll believe it when we see it! With no funding, we're not exactly sure how they will come up with the funds to build the Lapboards. Preorders are being taken on Phantom.net, but credit cards are not being charged until the product is delivered. Hopefully PHEI is following Alienware's original business model of "Pay first, build later".

I've contacted Phantom Entertainment's PR department at pr@phantom.net with these concerns and will post their response if one is ever received. Cross your fingers!

Game Over

He did it. As expected, President Bush today sign the dotted line banning online gambling. What am I supposed to do now? Read a book? Leave the apartment? Get real...

PartyPoker has already stopped taking bets from American players (read the official press release here)! It allows you to login to the site, but does not let you enter any cash games. You are able to take out the cash in your account only if it exceeds $100, but only in the form of a check.

PokerStars announced today they would continue taking U.S. bets saying the U.S. gaming ban does not cover poker. In addition, I received emails from UltimateBet, FullTilt & Bodog indicating they were "Business As Usual".

PartyPoker's withdrawal is surprising considering the hurdles the ban must still pass. The ban clearly violates U.S. agreements with the WTO. Also, the government has 270 days to write regulations and start enforcement. U.S. banks and other credit card issuers can be restricted easily. But third parties outside U.S. jurisdiction — notably a company called NETeller — take electronic transfers from banks and pass them to gambling sites. How do you stop them?

I have a feeling this story is not over just yet. Voice your outrage & send a letter to your local representative by clicking here. Or sign the online petition against the ban.

Congress Passes Bill Banning Online Gambling

$8 billion: The amount wiped off the value of online gambling shares on Monday after the U.S. Congress passed legislation to ban Internet gaming.

Not since the cancellation of Seinfeld have I cried so much over a news story.

I heard "the news" last night after returning home from a poker-plagued weekend in Denver. There, I was surrounded by a bunch of poker fanatics, even a few professionals. After talking poker for 3 straight days & taking 2nd place in a tournament with these studs, I was finally getting the poker itch back - this after playing virtually every single day the last 4 years before burning out this summer. But this time I was ready to up-the-stakes with my newfound enthusiasm.

Then the bombshell...

Congress yesterday passed a law banning the use of credit cards, checks and electronic fund transfers for Internet gaming basically making it impossible for American citizens to gamble online. We’re not just talking poker, but all forms of internet gambling excluding horse racing. President Bush is expected to sign the Unlawful Internet Gambling Enforcement Act in a few weeks.

I discussed the hypocrisy when the bill was originally proposed in the House back in July. But not one single person, including myself, took the bill seriously! Thus, the surprise passage threw the online gambling industry into a tailspin Monday. Shares of publicly traded companies PartyGaming, Sportingbet and 888 Holdings tumbled in heavy trading on the London Stock Exchange, wiping out nearly $8 billion in market value. The companies immediately announced they would stop taking bets from the millions of active U.S. customers as soon as Bush signs the proposed law.

This news hurts a lot of people: investors saw 50% of their investment sliced in one day, professional online gamblers saw their career ripped away, and the online gaming companies saw the majority of their players banned. Is this fair?

It reminds me of the city-wide smoking ban in my hometown of Madison, Wisconsin. Many of the affected bars & restaurants never recovered after the ban took effect. Should they have seen this coming? The government is essentially telling us what we can & cannot do in our private time. Alcohol good, smoking bad. Lotteries & horse racing good, poker & sports gambling bad.

Don’t panic yet. Many poker players are already preparing for ways to skirt around the law. Setting up offshore bank accounts may be a way to continue gambling online through these foreign websites. The gaming sites themselves are also going to offer gold & silver as an alternative to paying out in cash…

Remember how the music industry reacted too slowly to the mp3 revolution? If they would have embraced the technology instead of resisting it, both record labels & artists would be in much better shape today. In this instance, if the government would have learned to tax & regulate online gambling, both gamblers and the government would be happy.

(To sign an online petition against this ban, click here)