Shares of leading Online gambling corporations Playtech and PartyGaming, surged yesterday in the wake of US attorney’s action against the two online poker titans PokerStars and FullTiltPoker. The steep increases are a result of analysts’ estimations that the US attorney’s actions might have a negative impact on PokerStars and FullTiltPoker activity world wide, thus benefiting their global competitors.
As poker-on-line reported yesterday, US attorney for the Southern District of New York ordered the freezing of accounts of two payments processors. These accounts hold payments of around $30M owed by online poker rooms PokerStars and FullTiltPoker to more than 20,000 US poker players. This order followed a seizure warrant issued by the District Court of Southern New York for these same accounts.
These actions against the two leading poker rooms are another step in a long time battle of US authorities against online gambling. The battle began in 2006 when The Unlawful Internet Gambling Enforcement Act was legislated. The Act prohibited all financial transactions involving online gambling corporations. Most Offshore gambling corporations, including Playtech reacted by eliminating their US activity. PartyPoker was forced out of the US.
PokerStars and FullTiltPoker decided to continue to service US customers. A decision worth billions of dollars to these corporations. If further escalation takes place, it might endanger the two giants’ activity in the US and also have a secondary effect on their European activity. This will probably benef their competitors, especially second tier players Playtech and PartyGaming, which are now focused on the European market.
Markets reacted accordingly. Playtech (PTEC.L) rose 16.75p to 480.50 PartyGaming (PRTY.L) rose 15.25p to 254.25p. The shares are traded in the London Stock Exchange. PokerStars and FullTiltPoker are privately owned companies and therefore the effect on their value is not clear
