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Software maker shifts focus to Europe
Shares jump nearly 10% on earnings

By Andrew Flynn - Canadan Press

Gambling software developer CryptoLogic Inc. said it has insulated itself against tough rules that stop Americans from gambling online, shifting its focus to Europe and boosting third-quarter profits 41 per cent.

Toronto’s CryptoLogic, which will soon move its operations base to Ireland, posted a quarterly profit of $7.2 million (U.S.) as revenue rose 32 per cent.

Earnings for the three months ended Sept. 30 amounted to 53 cents a share and compared with $5.1 million, or 36 cents per share, a year earlier. The third-quarter profits beat consensus analysts’ expectations of 46 cents a share, igniting investor enthusiasm for the company.

CryptoLogic shares gained $1.79 (Canadian), or nearly 10 per cent, to $20.66 yesterday on the Toronto Stock Exchange.

“I don’t think the U.S. debate is over, because the benefits of regulating Internet gaming are overwhelming,” CEO Lewis Rose said during a conference call with analysts.

“For the short term though, our course is clear: we will pursue opportunities elsewhere. We’re in a formidable position; we’ve been preparing for this eventuality for the past five years, successfully shifting our business to the U.K. and Europe.”

On Oct. 13, the U.S. government passed the Unlawful Internet Gambling Enforcement Act into law, effectively banning online gambling in the U.S. The company has now set its sights on the “tantalizing” Asian online gaming market, Rose said.

Wow! Does this suck or what?

The word out there is that the days of online qualifying for the World Series of Poker are over folks!

How come?

Well, there was a leak from Harrah’s Entertainment, the company that happens to own the World Series, that online qualifiers for the World Series will no longer be accepted. More exactly, it was said that Harrah will no longer accept “third party registrations” on behalf of poker web sites and online satellite winners.

Thomson, the director of Harrah’s communication clarified, “While we’re still reviewing registration requirements, it’s likely we will accept third-party registrations from entities such as charitable and civic organizations and offline tribal and commercial casinos in the US and abroad with whom we have licensing agreements to conduct WSOP satellites, as well as entities for which we have sponsorship agreements that run contests for their customers. We will most likely not be accepting third-party registrations from other entities. We will, of course, continue to accept registrations from individuals.”

So it will probably not be possible to win your seat online. Some online web sites are already implementing this. Full Tilt, for example, already sent out an email: “Unfortunately due to the upcoming change in legislation Full Tilt Poker will no longer be able to satellite US residents into live tournaments in US. This policy will be effective immediately.”

Player response?

“THIS is the end of online poker. When the WSOP/WPT attendance dies, so will the influx of new players. Un-[censored] real.”

“It’s safe to say that more than 4,400 players who played in this year’s main event got in it by playing online poker. To put it into perspective, that number is only 1,219 less than the total number of players in last year’s main event, and dominates the 2004 figure of 2,576 players.”

Of course, you can win 10K online and use that as your entry fee. The question is: how many players will be temped to cash out their 10K instead of using it for the WSOP?

Expect significant shrinkage folks.

U.K. firms sell to Caribbean buyers, offshore operators ‘licking their lips’

By Pete Harrison - Reuters News Agency

LONDON — A looming U.S. ban on Internet gambling is already scaring off London-listed operators, but the industry will continue to thrive in the hands of private operators in locations like Costa Rica, Antigua and Curacao.

The fear of extradition to the United States has forced executives in the United Kingdom to turn away from their most lucrative market, some selling their U.S. operations to counterparts in and around the Caribbean which have less amenable extradition treaties with the United States.

Sportingbet CEO Nigel Payne this week reassured Antiguans the company would not downsize its operations there and is in talks to sell its U.S.-focused business to a private firm.

Leisure & Gaming’s U.S operations VIP and Nine.com are also likely to end up in private hands, with sale talks underway.

Analyst Tejinder Randhawa at Evolution Securities said the industry was splitting into two camps: the European-listed companies and those elsewhere looking to exploit the U.S. ban.

“The market will not go cold-dead overnight,” he said. “There are huge opportunities, and all the private offshore operators are licking their lips.”

U.S. Congress passed a bill to outlaw online gambling this month, with President George W. Bush expected to sign it into law today. Many U.K. companies immediately announced plans to pull out, wiping $7 billion (U.S.) off their shares.

“U.S. gambling is untenable for London-listed companies, but these U.S. operations are all viable and profitable businesses that have a future,” said a source close to Leisure & Gaming.

The U.S. ban will also make it illegal for banks and credit-card companies to process payments to online gaming companies. “But no doubt there will be operators that spring up to handle the payments,” said Randhawa.

About 170 websites have declared their intention to stop accepting U.S. players, the vast majority since Congress passed the act, according to gaming website Casino City, which expects 10 per cent to 15 per cent of the world’s 2,700 or so gaming websites to eventually block U.S. customers.

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Live Poker knows this bill has no teeth in regards to online poker and thus welcomes all US players with open arms. Come to Live Poker, your money is safe with us!