Barney Frank Disappoints Online Gambling Industry

British online gambling shares tumbled sharply today, after having climbed steadily in recent weeks bolstered by the news that Frank Barney was planning a bill to repeal the UIGEA.  The latest announcement from Frank is that he is tabling an ‘alternative bill’, which will require operators to apply for a license to operate games in the US.  This would effectively ‘regulate gambling’ not ‘repeal the UIGEA as was previously hoped.  The widespread feeling of this about-turn from Frank is disappointing to say the least. 

The big fall in shares reflect investor disappointment in this news.  Many investors were optimistic that Frank would be introducing a bill seeking to completely repeal the UIGEA.  Many articles found on online news sites indicated as much.  Most online gambling stocks were artificially inflated by Frank’s strong comments in recent months, in which he described the UIGEA as “One of the stupidest things he had ever seen and wanted it ‘undone’, adding “It was not the government’s job to protect people from themselves”.

However, some analysts feel the market has over-reacted to the disappointment of the watered-down bill.  A writer for suggested the market is misreading the situation, pointing out that the market appears not to be taking into account the fact that big players such as PartyGaming could still re-enter the US market in a joint-venture with a US-licensed entity, (such as the Seminole Tribe of Florida for instance), if Frank’s bill should be successful.  Additionally, PartyGaming could become a prime takeover target for a US-based casino or company wishing to enter the global online poker arena.

Whether or not this means PartyGaming shares are currently under-valued following recent slides remains to be seen.  The share price had risen spectacularly in the last month or two on not much else apart from Barney Frank-induced excitement.

PartyGaming closed at 46.25p today, down from a high of 58.5p a week ago.

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