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Poker News | Casino Poker | Tournament Reports

PartyPoker and PacificPoker to Pull Out of US Market

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The headlines are grim in some cases, encouraging in others, and downright confusing in some, but there's no question that billions of dollars in stock valuations have been lost in the early hours of Monday, October 2, 2006, a long Monday, indeed for online gambling investors.

Reports from sources as varied as the Financial Times of London to Al-Jazeera have made the online gambling ban above-the-fold news worldwide as 888 Holdings, parent company of Pacific Poker , is expected to announce today that it will suspend account activities with US customers. According to the London Times, "888 Holdings said it would halt its entire US-facing operation, which accounts for half its business, once the new law comes into effect. It said that while the suspension would also have a material effect on its annual earnings, it still had sufficient cash to continue its operations and develop the business elsewhere." 888 Holdings stocks lost approximately 45% of their value in early trading Monday morning.

PartyGaming LLC, parent company of Party Poker , announced in a release October 2 that if President Bush signs the Port Security Act (the legislation that the Internet Gambling Prohibition was attached to) into law, that Party Poker "will suspend all real money gaming business with US residents, and such suspension will continue indefinitely, subject to clarification of the interpretation and enforcement of US law and the impact on financial institutions of this and other related legislation."

US residents will still be able to play Party's play-money games, and access to the free games will be unrestricted, and access by non-US residents to PartyGaming's real-money games will not be affected. Party's shares fell 59% in early trading Monday on announcement of the ban and the closing of the US market, one of the largest sources of revenue for the company.

Mitch Garber, Chief Executive Officer of PartyGaming, said "We have a substantial gaming business outside the US, one that is highly profitable and growing rapidly on one of the most technologically advanced platforms available. In the first half of 2006 our non-US business generated revenues of $150 million, a 151% increase over the comparable period in the previous year. PartyGaming is by far the largest online gaming company in terms of non-US business and liquidity and we intend to focus on and increase our advantage in that area."

Neteller, a leading money-transfer service used by many online poker players to fund their accounts, also suffered heavy losses in trading Monday morning and said that this act could have a "materially adverse" effect on its business with US customers.

While PartyPoker and PacificPoker have already announced their plans to withdraw from the US market, and major sites such as Pokerstars and FullTilt Poker have yet to announce their plans, several sites have announced their intention to continue doing business with US players. Sportingbet LLC, parent company of ParadisePoker, announced their plans to remain active in the US market even after seeing their stocks fall more than 60% Monday morning. TruePoker and Carbon Poker announced on the internet forums hosted by 2+2 publishing that their site would also continue to welcome US players.

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