• by Wendy Davis , Staff Writer @wendyndavis, October 3, 2006

In an unexpected turn of events, Congress early Saturday morning passed the Unlawful Internet Gambling Enforcement Act, which bars banks and credit-card companies from processing payments for Internet gambling.

There had been rumblings about shutting down the $12 billion online gambling industry for months, but it didn't seem likely that the House and Senate would agree on wording. Until last weekend, that is, when last-minute maneuvers resulted in the bill's passage in both chambers of Congress. The act hasn't been signed into law yet, but that's expected within the next two weeks.

The law's effects are already being felt. Stock of the major Web gambling companies traded in London plummeted yesterday. Additionally, three companies--Gibraltar-based PartyGaming PLC (which runs PartyPoker.com) and 888 Holdings PLC and London-based Sportingbet--said they would stop doing business with U.S. gamblers.

"The Board of PartyGaming Plc has concluded that the new legislation, if signed into law, will make it practically impossible to provide U.S. residents with access to its real-money poker and other real-money gaming sites," stated PartyGaming in an update posted on its Web site.

It's likely some gambling sites also will pull their dollars out of the online ad market. Nielsen//NetRatings estimates that online gambling accounts for 2.9 percent of display ads in the entertainment category, or .06 percent of total online display impressions.

Of course, not everyone's convinced the law will apply to all gaming sites. The law specifically says that banks and credit-card companies can't process funds related to unlawful Web gambling, begging the question of whether all online gambling is unlawful. Certainly, there's room for interpretation; companies can argue with a straight face that online gambling only is unlawful if it's on sporting events, as opposed to games like poker. In fact, some executives already are pushing that interpretation. Also, creative gambling sites should be able to figure out how to allow U.S. residents to finance gaming without directly involving U.S. banks.

But, at least for now, it appears that large companies don't want to take the chance of antagonizing the U.S. authorities by continuing to market to Americans.