In September 2006 the US Congress passed a law that actually shut down online gambling, and the shares of many online gambling companies, including many based in the British Virgin Islands, fell dramatically. For example, among such BVI-based companies there are Empire Online Ltd. and Playtech Ltd. Empire Online Ltd., which also has arrangements to market Casino On-Net (part of 888.com, registered in Gibraltar), is one of the major London-listed internet gambling companies, and one of the leading providers of marketing services to the online gaming industry.
After gambling operators including Empire Online have stopped taking bets from the US, they actually became separated from their revenue sources. US players accounted for about 65% of Empire’s sales, when the company stopped accepting wagers from American gamblers. Now the BVI company is selling its gambling business; it started with selling the gambling web sites to the largest London-listed online gaming company PartyGaming, based in Gibraltar. Empire Online separately stated that it will receive about $38 million from this sale, and confirmed that it will continue the discussions on sale of company’s gaming business and assets.
This transaction between the online gambling companies based in BVI and in Gibraltar was confirmed on January, 10. On January 18 another company closed its US Internet gambling services, which made over 65 percent of its business.
British money transfer firm NETeller Plc, registered in the Isle of Man, could be considered to be the latest victim of the US crackdown on online gaming business. Closing of British group’s business in America followed the arrest in U.S. Virgin Islands of its two founders who are accused of illegally laundering Internet gambling proceeds. Stephen Lawrence and John Lefebvre, both citizens of Canada, are charged with conspiracy to transfer funds to promote illegal gambling.
It was said by prosecutors that NETeller processed more than $7.3 billion in transactions in 2005, and more than 95% of its revenue from transfers involved Internet gambling companies. It was founded by Lawrence and Lefebvre in 1999. Lawrence holds a 5.91% company share through his investment vehicle Corvina, while Lefebvre holds 5.54% through Eagle Medallion Fortress.
A US judge set bail at $5 million for Lefebvre, which was conditioned on his turning over all travel documents. Each defendant can face a maximum prison sentence of 20 years in prison.
NETeller said in its statement following the arrest that it was seeking immediate temporary suspension of its stock, which trades in the UK, and that the two company shareholders arrested do not have any current connection to the company.
It should be noted that shares of the company have fallen 60 percent since September 2006, when the online gambling crysis has started to develop. The change of the US legislation has led most operators to withdraw from the US Internet gambling market.
Another victim of US government fight against online gambling was BVI company InterBill Ltd. recently accused of fraudulently debiting funds from thousands of consumers’ bank accounts.