US inquiry hits web gambling shares

Shares in online gaming firms tumbled on Monday following news of a fresh investigation into online gambling in the United States…

Shares in online gaming firms tumbled on Monday following news of a fresh investigation into online gambling in the United States.

The US Department of Justice has demanded information from some of the world's biggest investment banks as part of the investigation, banking sources said.

Shares in the world's biggest online gaming group, Partygaming, fell 9.8 per cent earlier this morning, while rival Sportingbet was down 3.4 per cent, and 888 was down 3.5 per cent.

Internet gaming was effectively banned last year after President Bush signed legislation outlawing gaming transactions in October.

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Sources said the Department of Justice had ordered the banks to hand over all e-mails, telephone records and documents connected with Internet gaming firms.

Analysts said prosecutors were probably trying to target founders and senior executives of Internet gambling companies, just as they did with the arrests of two Neteller founders last week.

Canadians Stephen Lawrence and John Lefebvre have been charged with handling billions of dollars in illegal gambling proceeds. Both face a maximum sentence of 20 years in prison.

European gambling companies, including Partygaming, have been taking business from the United States for many years arguing that until last October US federal law was ambiguous and made no reference to the Internet.