US gambling law claims two more London scalps

The fallout from new laws restricting internet gaming in the US cast a pall further across the City yesterday when two more London-listed companies suspended operations there.

Fairground Gaming and Leisure & Gaming, which run casino and poker websites, joined the mounting casualties from Congress's shock decision this month to ban banks and credit card companies from processing payments from internet gamblers in US states where it is illegal.

FireOne, whose shares change hands on the Alternative Investment Market, said yesterday it too would no longer process US credit card payments relating to internet gaming as soon as the law comes into force.

That is expected to happen in a matter of weeks, once President George Bush signs the Unlawful Internet Gambling Enforcement Act.

Meanwhile, one of the City's leading law firms reportedly withdrew from advising on the sector. Slaughter and May, legal counsel to more of Britain biggest companies than any other firm, was unavailable to comment on suggestions it would no longer advise internet gaming companies after the US clampdown.

Many of the online gaming groups derive the lion's share of revenues from across the Atlantic. The US ban has, therefore, hit the industry hard.

Shares were hammered last week, with more than £3bn wiped off their valuation on the London market in a day. Yesterday, Fairground fell 8.5p to 14.5p, Leisure & Gaming crept 0.75p higher to 8.75p, and Fire- One lost 17.5p to 50p.

Trading in the shares of World Gaming, another internet gambling company, was suspended on Monday after it warned that in light of the US legislation, which in effect turns off 95 per cent of revenues, it may be driven out of business.

Less than a week after admitting it may be in breach of loan conditions, World Gaming asked for trading in its shares to be suspended "due to a fundamental uncertainty over its ability to continue trading".

Unlike World Gaming, Fairground insisted it was "confident" its remaining operations, which account for just 30 per cent of sales, were profitable, and stressed that it had sufficient cash to go forward.

"Urgent" cost cuts are imminent and a tie-up with another company may be on the cards. Fairground is reviewing its overall strategy. "We are proceeding with appropriate caution in evaluating opportunities for further geographical diversification," the company said.

Leisure & Gaming is mulling whether to suspend, close or sell its US operations and has received approaches. Talks continue, while it concentrates on its UK and Italian businesses. Jobs will go at FireOne, which is restructuring and paring costs.

Courtesy of Gary Parkinson

News Added: 11 October, 2006

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