Online Gambling Bill Scares Investors

Online gambling companies in the U.K. took a huge hit Monday as investors reacted to news that the U.S. Congress had passed legislation prohibiting the use of credit cards, checks and electronic fund transfers for online gaming.

Shares of British gambling companies, including Sportingbet and PartyGaming, were sharply lower Monday.

CBS News reporter Vicki Barker in London of PartyGaming, the world's largest online gambling site, were down about 60 percent in early Monday trading.

PartyGaming says it will pull out of the U.S. market if President Bush signs the legislation into law.

888 Holdings says it is suspending online betting operations in the U.S. as a result, and Sportingbet says it has called off takeover talks with World Gaming.

Gambling in any form is illegal in most of the United States, but is an accepted feature of British society. Betting houses, offering wagers on everything from horse racing to whether it will snow on Christmas morning, are as common on the streets of London as pubs.

But just because it's big business in Britain, doesn't earn it an honored place in the American market. As soon as the Internet began blurring the lines between U.S. and U.K. commerce, members of the U.S. Congress reacted.

Republican Senator Bill Frist is one of the lawmakers who has fought for years to see online gambling banned, maintaining simply that it's illegal.

The online betting legislation got through Congress as a tagalong on a port securities bill passed on Saturday, which was largely popular and easily won the necessary votes.

President Bush has used his power of veto very sparingly during his leadership, and isn't likely to scrap the port security bill over the gambling legislation, which is also very popular among the conservative base of the Republican party.