US Legislation

2 Oct 2006 07:00

888 Holdings plc02 October 2006 2 October 2006 888 Holdings Public Limited Company ("888" or the "Company") Announcement Re: US Legislation The Board has discussed the implications of the internet gaming provisionscontained in Title VIII of the Safe Ports Act which passed Congress in the USAearly on the morning of Saturday 30 September. These provisions state that, fromthe date the legislation becomes effective, the receipt of funds by electronicfunds transfer and other prescribed methods in connection with internet gamingthat is illegal under U.S. state or federal law will constitute a federaloffence by the relevant operator. The legislation is expected to be signed into law by President Bush within thenext two weeks, and will become effective immediately thereafter. In addition theAct requires the Secretary of Treasury, within 270 days, to issue regulationsrequiring financial institutions to block transactions in connection withinternet gaming. In many respects the precise effect of the legislation is unclear and it is notyet known what the implementing regulations will say, or how financialinstitutions at whom part of the legislation is directed will react.However, this legislation indicates Congressional intent to treat internetgaming, whether sports related or not, as illegal. In addition, it is the firstfederal measure to address internet gaming explicitly. This represents asignificant development in the US legal status. The Act also addresses certainjurisdictional and other uncertainties in the previous U.S. legal situation. In the light of these considerations the Board has concluded that it isappropriate to suspend participation by US based customers in activities coveredby the legislation. The Company will implement this suspension immediately uponthe legislation taking effect and the suspension will continue for so long asthe legal situation remains the same. The Board will continue to seekclarification of the overall US legal position to determine whether and to whatextent if any resumption of participation by US customers is feasible. Atpresent however no assurance can be given that this will be possible. TheCompany will continue and develop those aspects of its US business which are notaffected by relevant legislation. In recent years 888 has pursued a strategy of building its brand and business inmarkets outside the US. In the six months to 30 June 2006 revenues from nonUS players amounted to approximately 48 per cent of the Group's net gaming revenue and in the second quarter of 2006 approximately 68 per cent offirst time depositors (new customers) were non US. The Board believes theCompany is well placed to achieve further growth outside the US and will continue to focus its attention on growth in non US markets. A significant proportion of the Group's cost base is variable and relates directly to the level of activity. The Company will review its fixed cost base in the light of the suspension of US business described above and this may result in charges being taken in this year's results. Whilst suspension of US activities will have a material adverse impact onresults for this year and beyond, the Company has significant cashresources which are more than adequate to continue its operations and furtherdevelop its business taking account of sums required to cover return of depositsto US customers and the dividend payment due to be made to shareholderson 31 October 2006. Notwithstanding the planned suspension of US business referred to above, theBoard is confident that 888 remains a viable, profitable business and looksforward to pursuing growth opportunities in its international markets withcontinued vigour. -Ends- Contacts and enquiries 888John Anderson Chief Executive Officer +350 49800Gigi Levy Chief Operating Officer +350 49800 Bell Pottinger Corporate & FinancialAnn-Marie Wilkinson/Chris Hamilton +44 (0)20 7861 3232 This information is provided by RNS The company news service from the London Stock Exchange