|Shares in Canadian online gambling companies fell yesterday amid fears that the U.S. crackdown on Internet gaming may spread. Shares in software firm CryptoLogic Inc. tumbled $3.66, or 14.7 per cent, to $21.22 on the Toronto Stock Exchange, whilst online gambling firm Fun Technologies Inc., shed 20 cents or 3.7 per cent to $5.20. |
The declines followed the arrest of BetOnSports CEO David Carruthers on Sunday, after FBI investigations revealed that he and 10 other people have been charged with conspiracy, racketeering and fraud in the U.S. According to an industry analyst, operators are currently uncertain as to whether the US Justice Department has taken sole issue with BetOnSports, sports betting in general, or with the online gambling industry as a whole.
“The market has reacted quite violently to the potential that maybe it's the latter,' said Desjardins Securities’ David Shone, adding that none of the Canadian software firms has a sports wagering component. 'I guess the fear is that if they go after the operators in a broad-based manner, and are successful in shutting things down, that it would certainly hurt the fortunes of the software providers that generate revenue off of basically a revenue-share agreement.'