INTERNET gambling executives planned for the worst yesterday and prepared to suspend all their online operations in the US.

PartyGaming indicated that it intends to close its US operations, which account for about 70 per cent of its revenues, if a gambling Bill designed to make it illegal for banks and credit card companies to take payments and transfer funds to internet gambling sites — is signed into law by the President.

Mitch Garber, the chief executive, said: “This development is a significant setback for our company, our shareholders, our players and our industry. We are disappointed that the popularity and skill of poker in particular have not also been specifically protected.”

888 Holdings confirmed that it would indefinitely suspend business from US customers, who accounted for about half its customers. Sportingbet said its US business, which accounts for 70 per cent of its revenues, would become unavailable if its financial partners decide they cannot support the operation.

Gigi Levy, chief executive designate of 888 Holdings, said there was no question of the company seeking to circumnavigate the new law as it would now be a criminal offence for operators to accept funds.

As UK online gambling executives expressed their dismay ahead of the Bill becoming law, leading figures in the US financial industry predicted that the new legislation would be unenforceable and likely to drive the industry underground.

The warning came as the banking community promised to begin immediately lobbying the Federal Reserve and the US Treasury to amend the new legislation.

Edward Kane, a leading academic and consultant to the World Bank, said: “The new legislation is disturbing because it forces banks to be police officers. But more importantly, it is going to be extremely difficult to police. You just need to look at the success of money laundering efforts generally.”

Analysts said that the new legislation should stop US citizens gambling online with their credit cards because every company that takes credit card payments must give the issuer a code that denotes the nature of its business.

But the Independent Community Bankers of America, which represents 95 per cent of America’s banks, said many online gamblers would simply shift from paying with their credit card to using cheques or transferring money from their bank account to the internet company’s account.

Steve Verdier, a spokesman for the banks, said that gamblers could also fund their bets by setting up an electronic wallet on a website such as Firefly, which they could load up with cash using a money transfer or a credit card.

Mr Kane, a former adviser to the US Federal Reserve, said: “There will obviously be some people — maybe 30 per cent at a very rough estimate — who are law-abiding citizens and will stop online gambling immediately.

“But, for the others, what is to stop the betting company changing its name to something totally unrelated to gambling and changing it every week, every day even? How would the bank know it was a betting company and what would be the incentive for it to find out? This Bill most definitely isn’t air tight. For a start, it doesn’t impose the liability on the gambler or the recipient, just the financial institution.”

Mr Verdier, whose body represents 5,000 of America’s 8,000 community banks — which in turn represent 95 per cent of the country’s banks — said that he would immediately begin lobbying to get the proposed new legislation changed The organisation is keen to remove or water down the banks’ liability for “uncoded” transactions.

“We will argue that banks are not in a good position for the uncoded transactions because it’s just not feasible to catch those,” Mr Verdier said.

THE POLITICIANS

BILL FRIST

Republican leader in the Senate. May make presidential bid and sees anti-gambling legislation as vote winner. He initially tried to attach the measure to the Department of Defence Budget Bill before attaching it to an unrelated Bill that enhances port security.

JON KYL

The Bill’s chief sponsor in the Senate. An Arizona Republican who asserts that online betting is as addictive as crack and is a moral threat. With Frist, he tried unsuccessfully to attach the measure to a Bill authorising funding for the military.

JIM LEACH

A congressman, he thrashed out a deal with Frist whereby Leach will “repay” Frist for trying to pass the measure through the Senate by promoting his Tennessee colleague as a presidential candidate in Leach’s home state of Iowa.

THE COMPANIES

PARTYGAMING

Floated: June 2005 at 116p, valuing it at £4.64bn

Founders: Anurag Dikshit has taken out £486m and retains 28.9% worth £521m. Ruth Parasol has taken out £270m and retains 14.87% worth £268m. Russ DeLeon has taken out £270m and retains 14.87%. Vikrant Bhargava has taken out £197m and retains 6.96% worth £125m.

SPORTINGBET

Floated: January 2001 at 120p, valuing it at £156m.

Founder: Mark Blanford has taken out £26.2m since the listing and retains 1.8%, worth £5m.

888

Floated: September 2005 at 175p, valuing it at £590m.

Founders: Avi and Aharon Shaked have taken out £104m and retain 50% worth £186.8m. The Ben-Yitzhak family have taken out £34m and retain a 17.5% stake worth £62m.

THE LAW

Unlawful Internet Gambling Enforcement Act 2006

ILLEGAL

• Acceptance or handling of credit card or electronic money transfers from US punters
• Acceptance or handling of cheques or drafts from US punters
• Acceptance or handling of any funds by/from financial institutions or financial intermediaries

  LEGAL

• Bets made or received in Indian tribal lands
• Inter-state horseracing bets
• Fantasy leagues
• State lotteries

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