Sportingbet goes all in — for $1
British-based online gaming company got dealt too many bad hands, especially when Congress made it illegal for banks and credit-card companies to accept payment from online gambling sites. Eleanor Beardsley reports.
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KAI RYSSDAL: The British-based online gaming company Sportingbet has been dealt one too many bad hands lately. Its chairman was arrested last month at New York's Kennedy Airport. Gambling by computer was the charge. Though he was eventually released. And just today President Bush signed a bill that makes it illegal for Internet gamblers to use credit cards or online payment systems to settle their bets.
Essentially shut out of the lucrative U.S. market, Sportingbet has decided it's time to fold. The company sold itself off today. Eleanor Beardsley reports from Paris one buyer is betting Sportingbet is not a losing proposition.
ELEANOR BEARDSLEY: It was Antigua-based Jazette Enterprises that antied up just one buck for Sportingbet's U.S. operations. But Jazette will also have to shell out the $14 million to cover debt and severance packages to its 500 employees.
So, why would another company want to take on Sportingbet, a line of business that's clearly in trouble? Gaming analyst Justin Urquart Stewart:
JUSTIN URQUART STEWART: In this particular case, Jazette, which has bought the business from Sportingbet, they feel that they might be able to still carry on online gaming. So, basically they themselves are taking a gamble.It is now illegal in the U.S. to cover bets with credit cards and checks, but it's not actually illegal to gamble.
URQUART STEWART: This particular act is trying to stymie the payment mechanism, and to stop payments from going through banks. Now, will that be completely feasible? Well, I suspect probably not.Urquart Stewart says Jazette figures it can work out something like E-Bay's Pay-Pal, where payments go through an online third party, to allow U.S. resident to place bets.
The closure of potentially the most lucrative market is a hard blow to the fledgling online gambling industry. Shares in gaming companies sank quickly after Bush signed the measure into law.
Under Jazette, Sportingbet's U.S. operation will now be run as a private company with offices in Antigua, Vancouver, Dublin and Costa Rica, depriving 23 million Americans the pleasure of playing poker online.
In Paris, I'm Eleanor Beardsley for Marketplace.
