Online Gambling Is Hot; Investing In It Maybe Not

Online gambling is hot, and investing in online gaming companies – provided they are listed outside the U.S. – is becoming the cool thing to do. Investment Dealers’ Digest reports that many big-name investment firms, such as Merrill Lynch Asset Management, Goldman Sachs and Fidelity Management, have acquired stakes in online services that bet on sporting events. That’s illegal in the U.S., but permitted in many other countries, which is why many of these companies, reports IDD, trade on the London Stock Exchange and are licensed in places that allow the activity, such as Antigua and Malta. The situation has forced some of these companies, responding to clamors for shares, to list outside the U.S., which so far has not taken legal action against anyone who bets on sporting events on line. (Online casino gaming is permitted, however.) If the Department of Justice decides to go after these gamers, they may do so under the 1961 Wire Act, which bans the interstate transfer of betting information using wire communications, such as a telephone, IDD reports. But new legislation has been introduced – and passed by the House Judiciary Committee – that, if adopted, would put an end to the online gambling industry.