Online poker prohibition could be overturned
Poker Lobby & AGA groups aim to end Online Gambling Bill


The Poker Players Alliance and executives for the American Gaming Association (AGA) say they are hopeful that the recent political changes in the U.S. Congress will help them overturn the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA).

You may recall how the UIGEA was appended onto to the sure-to-be-passed Safe Port Bill when most Senators had already cast their votes and left, in the final hours before the Republican-controlled Congress adjourned for mid-term elections.

The UIGEA, while not making online poker illegal, did made it illegal for banks and financial institutions to process transactions for online gambling sites from U.S. customers when it was signed into law on October 13. Regulations that banks need to comply with have yet to be defined. A Government board has until July 2007 to define them.

AGA President Frank Fahrenkopf said the AGA previously opposed online gambling, saying, "Our policy changed back in April when we took a position that we thought the best way to go was to have an independent commission look at it."

Many analysts around that timeframe noted how online gambling actually lead to previously hesitant players coming to the physical casinos, swelling the number of overall casino visitors, which likely helped change AGA's perspective.

So the AGA board of directors will meet December 6, said Fahrenkopf, to consider whether "to support legislation in the new Congress calling for an independent study of Internet gambling to see if it can be properly regulated, controlled, taxed and licensed here in the United States."

Fahrenkopf pointed out, "My guess is that they are going to say let's go ahead and do it."

This past week Terry Lanni, chief executive of MGM Mirage who is an AGA board member, said the UIGEA is "ridiculous" because it was signed into law Oct. 13 as part of a larger port security bill -- and because it exempted horse races and lotteries, and online bets placed while on American Indian land.

Nevada Representatives Jon Porter and Shelly Berkley had previously introduced a bill to create a Congressional Commission to study Internet Gaming this past May. But the bill died. Noteworthy is that both Porter and Berkley were re-elected last week.

In contrast to the prior Congressional Commission proposed, if the AGA votes for a study it has already said it prefers an independent commission such as the National Academy of Sciences to do the study, noted Fahrenkopf, so results are free from the influence of lobbyists.

AGA's board includes CEOs from some the biggest live casinos in Las Vegas, such as Boyd Gaming CEO William Boyd, Harrah's Entertainment CEO Gary Loveman, MGM Mirage CEO Terri Lanni mentioned above, and Wynn Resorts CEO Stephen Wynn, amongst others.

Many bloggers have remarked if these well known casinos launch their own online gambling sites then a large majority of players will play at them because of brand recognition and huge marketing budgets, causing yet another re-alignment in the online gambling industry.

In an interview with Reuters news service, Fahrenkopf also remarked how the stated goal of the UIGEA was to protect American citizens. Instead, he noted, it caused many legitimate and responsible operators to pull out of the U.S. opening the way for unregulated companies to fill the void, since most US players were likely to continue gambling online.

He did not go as far as many others have to call the legislation Prohibition II, as did Pulitzer Prize-winning writer George F. Will in Newsweek's Oct 23rd edition and U.K. culture secretary, Tessa Jowell.

President of the 120,000-member Poker Players Alliance (PPA), Michael Bolcerek, said that results of the Congressional election have emboldened the PPA.

"Our members and other poker players went to the polls. They influenced the federal election," he said. "In the next 12 months we're confident that we'll get a study commission bill. We think an exemption [for online poker] is in order, as well."

Legal expert professor I. Nelson Rose, of the Whittier Law School, harshly criticized the UIGEA, saying how it is confusing and contradictory with all its exemptions, and noting how a portion of the bill even sanctions Internet betting conducted within states and tribal lands.

"It's a public embarrassment...it's a mess," said Rose. "Eventually I think they'll get Congress to change the law to do for Internet poker exactly what they did for Internet horse racing. It's an exemption but (based on) states' rights."

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Gambling911.com News Wire

Originally published November 20, 2006 1:28 pm ET

Good citywire piece here and a huge amount of research for those who trade in online stocks such as PRTY, 888, 32Red, NLR etc.

http://www.netbetblog.com/2007/09/gaming-stocks-and-partygaming-citywire.html

nteresting article from the CFD trader. Partygaming is singled out as a "buy".

Here is the information specific to PRTY.

The CFDealer: Betting on gaming stocks

One area that has caught my eye in the recent market turmoil is the gaming sector. Stocks like Neteller (NLR), Sporting Bet (SBT), 888 (888) and PartyGaming (PRTY) have held up pretty well in light of the recent volatility and in turn the shares have recovered strongly since the market bottomed in August.

A stock that has caught my attention is PartyGaming. The company suffered a huge hit last year when the US banned online gaming companies from operating there. The shares were as high as 180p in August 2005 and post ban it sits at around 28.5p.

The all-time low is 22p, so Im picking this out as a potential recovery play, not to the dizzy heights we witnessed in 2005, but maybe close to the levels we saw earlier this year i.e. 50p to 60p potentially over the next three to six months.

Part of the thought process behind the recovery is a bet on my part that the US could repeal its punitive stance on online gambling.

Controversial US Congressman Barney Frank, among others, has developed a growing lobby group pressuring the US government to restore citizens rights to pursue online gambling, while placing safeguards to protect consumers and ensure the integrity of financial transactions.

If Frank and his cohorts succeed in compromising the governments current stance, the whole online gaming sector could take off and potentially put it in the spotlight for corporate activity: MGM Mirage and Las Vegas Sands have publicly expressed an interest in online gaming if efforts to regulate the industry are successful.

PartyGaming recently issued an interim statement showing a pre-tax loss of $47.1 million (20.8 million) against a pre-tax profit of $320 million (158.4 million) for the comparable period last year. The US pull-out can be attributed to this dramatic turnaround.

The company has made a huge effort in cross-selling its services, increasing casino business turnover by more than 200%. Poker is still its biggest pull, accounting for almost two-thirds of its revenue. PartyGaming also launched a bingo website yesterday and might even give IG Index a run for its money with PartyGamings reinvigorated sports website.

Analysts have pencilled in 1p a share in earnings for 2008 and 1.72p for 2009. This places PartyGaming on a price to earnings ratio of 16.5 for 2009 with a price to earnings growth ratio (PEG) of just 0.22 for 2008-2009, suggesting significant upside if the company can deliver on its results and maintain double-digit earnings growth.

Long positions should be considered at market with a stop-loss based on a close below 24p and an initial target of 34p.