Although the regulatory regime for land-based gaming operations is well established in many countries, the gaming laws in such countries will not necessarily have been amended to take account of the Internet and the ability to offer gaming services online. Consequently, there is uncertainty as to the legality of online gaming in most countries and in certain others it is regarded as illegal either per se or unless licensed by the local authorities. In several countries, local regulators are willing to license and regulate local and often state-owned operators, but prohibit foreign operators.
Authorities in certain jurisdictions have taken both direct and indirect steps to restrict online gaming by seeking to prevent or deter banks, payment processors, media providers and other suppliers from transacting with and providing services to online gaming operators. The application or enforcement (or threat of enforcement) of gaming laws or regulations, or a change in sentiment by regulatory authorities on the enactment of new legislation prohibiting or restricting online gaming or services used by online gaming businesses or the taking of such indirect steps, may severely and adversely impact the business and financial position of online gaming companies. The legality of customers engaging in online gaming is also uncertain in a number of countries.
On 30 September 2006, the United States Congress passed the SAFE Port Act. That measure also contained certain provisions known as the 'Unlawful Internet Gambling Enforcement Act of 2006' that effectively made it impossible for the Group to continue to allow customers in the US to play real money games on its sites. President Bush signed the Act into law on 13 October 2006 and PartyGaming immediately terminated all real money games to customers located in the US.
The Group continues to monitor regulatory developments around the world with a view to managing the Group's overall risk profile whilst ensuring that revenue opportunities are maximised.
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