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| | | October 30 - Following the crackdown by the US government on online gambling
earlier
this month, two of the worst affected online gambling companies have been 888
Holdings Plc and PartyGaming Plc who have seen their share prices plummet on the
London Stock Exchange (LSE).
Battling for survival the online gambling giants, who were once bitter rivals in
the highly competitive online casino and online poker industries, are now in
'informal'
talks regarding a possible ?1.6 billion merger in order to compensate for online
gambling revenues lost due to the American ban.
It is no secret that the online gambling industry has traditionally relied heavily on
the United States as an online gambling market because the country has the majority of all online gamblers
in the world.
In fact, before the ban PartyGaming reportedly earned up to 80 per
cent of its total revenues from US players while 888 earned a little over 50 per
cent from US players.
The online gambling ban stems from the Unlawful Internet Gambling Enforcement
Act of 2006 (UIGEA) which was passed by Congress earlier this month and signed
into law by President Bush.
This new law has made it illegal for US banks and credit card firms to process
any payments or withdraws connected with online casinos, online poker rooms or online sports
betting sites.
As a direct result of the US online gambling ban, PartyGaming dropped out of the
coveted FTSE 100 and has been scrambling to reverse the slump its share price is
currently in. According to PartyGaming CE, Mitch Garber, the best way forward is through
consolidation with other large online gambling concerns who have found
themselves in the same boat.
While merger talks between PartyGaming and 888 are at an early stage,
representatives for both companies don't have to travel very far to negotiate
with each other seeing as both are based in the same Gibraltar office block.
PartyGaming owns and operates
PartyPoker.com, the world's largest online poker room and 888 operates the
highly popular
Casino-on-Net online casino.
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