Business up on news of ban

13.07.2006

Fears that the US House of Representatives vote to ban online gambling would impact on share prices were clearly exaggerated, as London share prices on gambling companies actually improved.

Shares in the Party Poker giant - the world's biggest online poker company - lifted more than 5 percent as investors in London gambled on a less enthusiastic response to the Bill when it reaches the Senate.

Smaller operators also benefited, with shares in Sportingbet up 4 percent and Empire Online 1 percent higher, although 888 Holdings fell half a penny.

ABN Amro analyst Michael Pacitti said support for online gaming stocks came amid doubts that the Bill will get through the Senate.

"Congress approved the Bill to prohibit online gaming," he said. "This was expected. The Bill must now go to the Senate where we believe there will be greater opposition."

The Internet Gambling Prohibition Act is sponsored by Republicans Bob Goodlatte, of Virginia, and Jim Leach, of Iowa, who managed to get similar Bills through Congress in 2002 and 2003 but failed to win the support of the Senate.

"We doubt that this most recent attempt will have greater success," said Pacitti.

"What changes in practice following the passage of this Bill in the lower house? Nothing.

"PartyGaming and others can continue to operate as they currently do."

Analysts at Dresdner Kleinwort added that there may not be time for the Bill to gain Senate backing with just 15 business days to the summer recess and 32 days before the mid-term elections in November. Dresdner said: "The probability of the Bill passing Senate has not gone up."

Online gaming shares have suffered in recent months by uncertainty caused by the threat of the ban under the Bill, with PartyGaming shares slumping 6 percent since the Bill was introduced.