RETRENCHMENTS IN ISRAEL

(648) (9-October-2006)

The human cost of US political moves

The tragic human cost of political moves in the United States to curb online gambling through financial restrictions was evident in a report in the Israeli business publication Haaretz today.

The newspaper reports that what could be the first of many online gambling retrenchments started at IM Intermedia which dismissed half of its 100 workers yesterday.

The firm supplies services for online marketing and data mining for online gaming marketing companies in the United States, and its customers include Intercontinental Online .

Haaretz says the cutbacks are just the first of many expected in the industry after the U.S. Senate approved a bill last week banning the use of credit cards for online gambling. American banks and credit-card companies will no longer be allowed to pass on funds to Internet gambling sites.

Initial estimates are that the first companies to feel the pinch will be small- and medium-sized firms that supply services to the gambling sites.

Israeli owned companies listed on the London exchange suffered heavily as a consquence of the US vote, which sent the financially restrictive proposal to the US president's desk for signing into law. Company values have plummeted at groups like Empire Online, 888 Holdings and PlayTech. Billions of dollars in value evaporated overnight in the online gaming industry as scared investors uncertain of the future bailed out.