INVESTORS LOSE BILLIONS ON ONLINE GAMBLING
25 September 2006
Tara Loader Wilkinson
25 Sep 2006
Regulatory crackdown and arrests in the US have hit pipeline of gaming flotations
Investors in online poker should know they can lose their shirts on one bad hand. But they might not have expected such a sustained run of bad cards that has seen the value of online gaming companies collapse by 51% from this year’s highs. It has also hit the prospects of those companies hoping to cash in on the tail end of the online poker craze by going public.
A combination of a clampdown by US regulators, high profile arrests of executives and questions over the sustainability of the business model of online gambling companies has wiped more than £6bn (€9.5bn) off the value of the big five listed companies.
PartyGaming, the biggest in its sector, is down a third from its highs in May, as is BETonSports, whose chief executive was arrested in the US this summer. Shares in 888.com have tumbled 47% from their peak this year, while SportingBet, whose chairman was held in the US last month, have dropped 58%. The worst performer is BetandWin, an Austrian gaming company whose co-chief executives were arrested in France this month and whose shares have collapsed more than 80%.
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