Online gambling operator Betcorp said Thursday it is closing its U.S. operations pending the expected signature of President George W. Bush on a bill that will outlaw online gambling in the United States.
In the meantime, the industry may be giving up on a Hail Mary effort to affect the course of events in the U.S. through international pressure brought by Antigua and Barbuda.
Betcorp joins Sportingbet, which late Wednesday said it will attempt to sell its U.S. business before the president signs the act. That does not give the company, which does the lion’s share of its business with U.S. bettors, much time to complete its fire sale.
The president is expected to sign the act into law on Friday.
In a terse statement, Sportingbet, which has operations in Antigua, did not lay good odds on the possibility of completing a sale—let alone one that would make its shareholders happy.
“Any offers received may or may not result in a sale of this business,” the statement said. “Based on the approaches received to date, however, it is unlikely that any such sale will realize significant cash consideration.”
Farewell to the U.S.
Betcorp said in a short statement that it will close its operations following the president’s signing ceremony but did not indicate that it had made any attempts to sell its U.S. operations.
“If the Act is signed into law by the U.S. President as presently drafted, the Group will no longer be able to accept funds transfers from customers resident in the United States,” the statement said.
“Given that a substantial proportion of the Group’s customers are located in the United States, this will have a very material adverse impact on the future prospects of the Group,” the statement concluded.
Government regulators in Antigua are urging its 44 licensees to turn their business focus away from the U.S. and toward Asia.
That is a sharp change in tone from a few days ago, when the prime minister of Antigua fired off a letter to President Bush protesting the law, and its ambassador filed a formal protest with the U.S. State Department (see Gaming Firms Plan Counterattack).
Concession Speech
At the time, a number of executives of the 17 online gambling firms with operations in Antigua were conferring with the government. Sportingbet CEO Nigel Payne was actually on the island until a few days ago.
The Antiguan government is in the process of amending its complaint to the World Trade Organization to include the latest U.S. law, which the government believes is at odds with a 2005 ruling made by the WTO. The WTO ruled in Antigua’s favor in the trade dispute with the U.S.
The WTO ruled last year that the U.S. has inconsistently applied gaming law so as to prejudice foreign countries, in violation of the General Agreement on Trade in Services (GATS). Both the U.S. and Antigua are GATS signatories.
The Antiguan government is charging that the new U.S. online gambling law, the Unlawful Internet Gambling Enforcement Act of 2006, is similarly protectionist and discriminatory, and adds more weight to its side of the dispute.
But in an interactive session, Antigua government minister Errol Cort advised the country’s online gambling license holders to minimize their risk by switching their business focus to Asia.
Contact the writer:CMedford@RedHerring.com
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