GPWA Times Magazine - Issue 2 - October 2007

34 Online gaming splinters into national markets By Michael Corfman It’s been nearly a year since the Unlawful Inter- net Gambling Enforcement Act was signed into law, and the online gaming in- dustry is still adjusting to the turmoil caused by its passage. The effect of the legisla- tion was felt immediately when PartyGaming and 888 Holdings officially abandoned the U.S. market on Friday, October 13th – the day President Bush signed the UIGEA into law. Most publicly traded online gaming compa- nies followed suit and stock prices tum- bled. In January, NETeller pulled out of the U.S. market following the arrests of its co-founders. Today payment process- ing is the single greatest challenge facing American players and the operators that serve them. Online gaming industry split After the UIGEA became law, Casino City intensified its monitoring of the more than 2,500 online gaming sites listed in its database to track policy changes regarding the acceptance of Americans and other gamblers. In August 2006, a total of 1,955 sites allowed U.S. players from every state to gamble online. By September 2007, the number of sites accepting players from every state dropped by 45% to 1,079 (Figure 1). The change among poker sites was even more pronounced. In August 2006, a total of 476 poker sites accepted all American players. By September 2007, that number dropped by 64% to 172 sites. Since the success of online poker rooms depends on player liquidity, the impact on poker rooms was greater than that experienced by other types of online gaming sites. In addition, the Share Price (Pence) Figure 3. Party Gaming Stock Values Peak Ring-Game Players (Daily) Figure 4. Ongame Network - U.S. Players Not Accepted Peak Ring-Game Players (Daily) Figure 2. Party Poker - U.S. Players Not Accepted Number of Sites Figure 1. iGaming Sites Accepting U.S. Players GPWA TIMES | Online gaming splinters into national markets