Online Gambling Shares Bolstered by U.S. Developments

Following the recent announcement by the US Department of Justice (DoJ) that the U.S. online gambling ban is online applicable to sports betting, the share prices of various European online gambling firms rose considerably on the London Stock Exchange.

Just before Christmas, the DoJ dropped a 'bombshell' when it admitted to reinterpreting the infamous 1961 Wire Act - which is the cornerstone of the department's justification for the prohibition of all online gambling in the United States - and found that it does not apply to casino, poker, bingo or lottery gaming, but only to sports betting.

The implications of this are enormous, as it could mean the end of the American online gaming ban, and the reopening of the world's most lucrative online gaming market. It could also mean that the world's biggest online gaming operators - most of them based in Europe - could soon enter the U.S. market, particularly those with ties to U.S. firms.

Shares of LSE-listed Bwin.party Jumped 23%

For instance, after the news broke, the shares of London-listed Bwin.party rose 23 per cent, a gaming firm that in October signed joint venture deals with Las Vegas-based operators MGM Resorts and Boyd Gaming. 888 Holdings also saw its share price rise by 9 per cent, which has an association with U.S. gambling giant, Caesars Entertainment.

Shareholders of these and other top online gambling firms with ties to the United States must be rubbing their hands with excitement at the prospect of watching their shares skyrocket if and when said firms are allowed to enter the U.S. Even though online gambling is now prohibited in the United States, before the ban it generated billions in revenues.

But while U.S. online gambling fans and operators alike were thrilled with this early 'Christmas present,' the DoJ has egg on its face considering that during the past few years it has used the 1961 Wire Act and subsequent Unlawful  Internet Gaming Enforcement Act (UIGEA) to justify the prosecution of online gaming companies and their executives.

The DoJ Seized the Domains of Three top Poker Rooms

This year, for instance, in what is known as 'Black Friday,' the DoJ seized the domains of three of the world's most popular and successful online poker rooms, namely Full Tilt Poker, PokerStars and Absolute Poker, and charged executives of all three with money laundering and bank fraud, while also freezing all real money player accounts.

Said leading European leisure analyst, Ivor Jones, 'This is a major change in the position of the DoJ. At the very least it clears the way for state-level online poker legislation. Potentially it opens the way for gambling services to be provided from offshore and this may encourage the U.S. Congress to legislate before the floodgates open.'