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)