THE American ban on internet gambling transactions claimed its first corporate failure yesterday when World Gaming, the AIM-listed operator, was forced to admit that its survival was in doubt.

The company, which derives about 95 per cent of its business from the United States, asked for trading in its shares to be suspended “with immediate effect due to a fundamental uncertainty over its ability to continue trading”.

The news came after last week’s announcement from World Gaming that the US ban might have put it in technical default of its loan conditions. It was due to repay $10 million (£5.4 million) to its banks by the end of the year.

A number of big institutional investors have sought to sell down their holdings since that statement. The company said on Thursday that Fidelity no longer had a notifiable stake. Yesterday it emerged that Man Financial had cut its holding from 5.3 per cent to 3.47 per cent.

The imminent demise of World Gaming comes a month after it announced an all-share £56.6 million offer from Sportingbet, its larger rival, at the equivalent of 104p a share. Later that day, Sportingbet announced that Peter Dicks, its chairman, had been arrested in New York, although it was not until the US Senate passed the ban that the deal collapsed.

Shares of World Gaming were suspended at 8½p yesterday morning, valuing the company’s equity at £4.6 million.

Sportingbet, whose shares rose 3¾p to 73¾p, confirmed yesterday that its chief executive and finance director had the right to exercise two million shares at a guaranteed price of 215p a share, despite the recent share crash. However, a company source said that the options, which vest next July, were “under review” and could be changed or cancelled.

There was further fallout from the US ban yesterday as it was confirmed that PartyGaming is to be demoted from the FTSE 100 index, while 888 Holdings will be expelled from the FTSE 250 to make way for PartyGaming.

Shares of PartyGaming fell by a further 2½p to a new low of 39p, but 888 rose by 2p to 107p on speculation that it could become a bid target.

Separately, Lord Steinberg of Belfast, chairman and founder of Stanley Leisure, said that he would be stepping down as non-executive chairman of Empire Online, to be replaced by Richard Rosenberg, a non-executive director.

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