Online gambling stocks rose sharply in overnight trading when reports began circling that the chair of the House Financial Services Committee in the US is considering legislation that would overturn the ban on online gambling passed last fall.
There were rumors in the last month that Rep. Barney Frank (D – Mass), chairman of the House Financial Services Committee, was considering introducing a bill to reverse the Unlawful Internet Gambling Enforcement Act (UIGEA), which was signed into law last year. Initially, Frank’s office denied there were any plans to do this, but reports were widely circulated yesterday stating that a spokesman for Frank was considering doing exactly that.
Steve Adamske, a spokesman for Frank, reportedly stressed there are no concrete plans as yet: “There’s no draft, no text — this is very much still in the thinking stage,” he was careful to clarify.
The Financial Times quoted Frank as saying that the UIGEA is ‘preposterous’ and one of the ‘stupidest’ ever passed. The UIGEA was attached to the Safe Ports Act last year to prevent online gambling companies from processing internet financial transactions with US banking institutions. The legislation caught many online gambling companies off-guard and some almost immediately withdrew from the US market, resulting in many investors dumping holdings in the publicly listed companies.
Poker Players Alliance, a lobbying group seeking to overturn the UIGEA, earlier this month hired former Republican Senator Alfonso D’Amato to chair its board. The group receives financial support from online gambling companies and committed online gamblers through a yearly subscription.
However, the odds of Frank overturning the UIGEA are long. Yahoo Finance quoted Anthony Cabot, a lawyer who specialized in gaming issues, as saying: “It’s very difficult to get legislators to support something that could be perceived as pro-gambling, particularly at the federal level. I think the congressman has a difficult battle ahead of him.”
Despite the inevitable problems Frank will face in his efforts to have the bill repealed, shares of British gambling firms jumped sharply overnight on speculation they may one day re-enter the US market.
SportingBet rose 5.4% to 58.75 pounds and PartyGaming bounced 12.5% to 42.75p, at one stage crashing through 46p.