Issue N17, 2007
May 3, 2007
Online Gambling Shares Slide after Frank’s Bill Proposal Disappoints
There was much speculation in recent weeks regarding the affect on the industry of U.S. politician, Barney Frank’s proposed bill to repeal the Unlawful Internet Gambling Enforcement Act. As rumors circulated that Barney was on his way to putting his money where his mouth is, share prices of many top online gambling brands such as Party Gaming and 888.com began to climb steadily. This rise reached a peak on the eve of Frank’s bill proposal last Thursday. The online gambling industry pinned grand hopes to the bill, based on the fact that Frank termed the UIGEA as “one of the stupidest things” he had ever seen. While some accused Frank of political lip talk, many saw him as the savior of what is widely considered a ridiculous and archaic gambling law.
However, the industry was hugely disappointed to read the wording of the new bill that called for operators to apply for a gaming license to run their gambling activities in the United States. Many feel that – should the bill pass successfully – U.S companies will benefit, while non-U.S gambling companies would not. As a result of the ‘watered-down’ alternative bill, stock prices, which had already been over-inflated due to the pre-Frank bill speculation, fell in trade. The last time that Party Gaming’s shares dropped so drastically in a single day was in 2006 when it began re-trading after pulling out of the U.S. market.
Not everyone in the gambling world shares these feelings of disappointment. Some analysts are of the opinion that the new law could be a way for non-U.S. gaming companies to enter the market. They suggest, for example, that companies such as Party Gaming join up with a U.S. entity in order to enter the American gaming market again, and that many U.S. companies would be eager to join up with established online companies in order to get a bite of the internet gambling market. Meanwhile, all eyes remain on share prices that are expected to stabilize soon.
Papua New Guinea Changes its Gambling Laws
Industry analysts say that by the year 2010, the Asian-Pacific region will be grossing over $7-billion in online gambling revenues. Countries who don’t keep up with the times and make changes in their legislations will not be able to benefit from increased taxation revenues, tourism and other perks that come with this staggering number. Papua New Guinea has realized the potential to be had in this prediction and, this week, changed its gambling laws.
There was no doubt that Papua New Guinea’s parliament was unanimous in its decision to bring change to the country’s laws – the new bill that essentially legalizes internet gambling and casinos passed with a 61:0 vote. "It is essential that we keep instead with global development in industry so that the appropriate regulatory measures are in place and that the industry in Papua New Guinea is competitive with other countries," said Prime Minister Michael Somare in a radio show interview this week.
Under the new law, only foreign customers will be allowed to access internet gambling sites that are based in Papua New Guinea. However, locals won’t be left out of the gambling fun. Each of the country’s 20 provinces will be entitled to build a brick and mortar casino and the government will benefit from 25% taxes on the gross profit of these institutions – 5% of which will be directed into community projects. This is a classic example of a country that sees the need to keep up with contemporary trends and stay ahead. New legislation ultimately means a more controlled and regulated gambling industry and is beneficial to everyone involved – the gamblers, the government and, of course, the community that profits the most.
Online Gambling Scam Lands a 10 Year Prison Sentence
Robert Eon Marshall, a 58-year-old citizen from Texas, was sentenced to 10 years in prison after he conned dozens of victims by luring them into investing in his online gambling company. Forty-one mostly elderly and retired people fell for Marshall’s mail fraud scam and lost all their savings and pension money.
Marshall was charged with selling ownership of his company, the ECM Group for $10,000 a unit when in fact the company only brought in around $1000 in revenue. Marshall made his victims believe that they were buying into a nest egg by mailing them fake financial reports over a two-year period. Many people invested more, based on these reports. It is estimated that Marshall managed to con his victims to pay in almost $900,000. Over and above the jail sentence, he was ordered to pay back $1-million in restitution.
His Fort Worth based company was linked to and operated several online gambling sites, including World Poker Party.com and Double your Money Casino.com.