Tuesday, October 10, 2006

The first firings in the Israeli online gambling industry have started, as
IM Intermedia dismissed half of its 100 workers yesterday. The firm supplies
services for online marketing and data mining for online gaming companies in
the United States, and its customers include Intercontinental Online. The
company confirmed the report. Yesterday's cutbacks are just the first of
many expected in the industry after the U.S. Senate approved a bill last
week banning the use of credit cards for online gambling. American banks and
credit-card companies will no longer be allowed to pass on funds to Internet
gambling sites. Initial estimates are that the first companies to feel the
pinch will be small- and medium-sized firms that supply services to the
gambling sites. It appears those predictions are coming true. Since the law
was passed, share prices of Internet gaming companies, including a number of
Israeli firms, have plummeted by dozens of percent. Empire Online has lost
25 percent, 888 has dropped 28 percent, PlayTech lost 35 percent, Party
Gaming lost 61 percent, and Sportingbet plummetted 62 percent. Billions of
dollars in value evaporated overnight in the online gaming industry, and
this is just the start as half of the revenues in the $6 billion sector come
from American gamblers.