Friday, November 03, 2006

The respected Bloomsberg columnist Matthew Lynn slammed the US government's
Unlawful Internet Gambling Enforcement Act this week, describing its
consequences as the worst crisis in online gambling's short history, but
predicting that major companies affected by the Act would prosper regardless
of the US challenge. "The U.S. stance on Internet gambling is illogical and
misconceived," the columnist wrote. "Like most bad decisions, it will be
reversed one day - the issue is whether the companies can wait until then."
Lynn quotes a top problem gambling expert on the subject to underline the
regulation rather than prohibition argument. "Whatever our American friends
try to do, gambling is a legitimate industry and it is here to stay,''
Andrew Poole, online-services coordinator of the London-based
gambling-counseling group GamCare, said. "While there are potential problems
arising from online gaming, with the right regulatory approach we believe
they can be dealt with.'' Recapping on the business consequences to public
companies following the enactment of the American law (see previous
Online-Casinos.com/InfoPowa reports) Lynn opines: "It will be a hard slog
to regain that business from other countries. An industry that is missing
the world's biggest economy will always rest on shaky ground. "A merger of
the big players is one rational response. It is, however, also worth posing
the question: Can the U.S. ban hold? "Probably not," he writes, before going
on to contend that there are three flaws in American government reasoning:
First, it isn't consistent. Lynn asks: "If gambling is so damaging, why is
Las Vegas still flourishing, while companies such as PartyGaming are getting
hit? The U.S. gaming business has never been run by men who were narrowly
turned down for sainthood. If it's acceptable for others to profit from U.S.
gamblers, then U.K. listed companies, which are respectable and backed by
solid investors, should be allowed." Second, Internet gaming is no worse
than other gambling. "True, it's right there in your own home - you just
have to log on, and you are in a casino. And it operates 24 hours a day,
seven days a week. Yet that isn't the whole story. 'A lot has been done in
terms of self-regulation,' GamCare's Poole said. 'The responsible operators
have strong policies for limiting the harmful impact'.''

Third, the U.S. has chosen the wrong target. "It is easier to monitor a
virtual casino than a real one," says Lynn. "All the transactions use credit
cards, so the operator can check precisely who people are, and how old they
are. They can set limits on how long people play, and how much they lose.
Try doing that on a racetrack or over a crowded roulette table."

Lynn asks why the US law tackles online gambling, when the Internet is awash
with material far more dangerous to social well being and financial security
than people playing virtual poker. He outlines regulatory moves in Europe
and the UK with approval and forecasts that in time, U.S.-based gamblers
will find a way to play - even if it means getting credit cards from a new
breed of offshore banks.

"The companies that go the distance will flourish in due course," he
concludes. "Bad laws are repealed eventually - it is just a matter of
staying in the game until you can collect your winnings. The pummeled share
prices of the main operators seem like a steal."