|Recent decisions by credit card companies to stop accepting online gambling transactions may reduce revenue for Internet gambling operations by up to 20%, a Wall Street Analyst said.|
Bear Stearns’ gaming analyst Jason Ader estimates revenues of $4.2 billion in 2003 for Internet casinos unless the credit card problem is overcome. Ader’s earlier estimates were as high as $6.2 billion, which was revised downwards to $5 billion, and now $4.2 billion.
Ader said a new report from Bear Stearns, due out this week, offers a gloomy outlook for the industry, which he describes as “fraught with a tremendous amount of uncertainty”.
The report counters the more upbeat forecasts of many in the Internet casino sector who may not have fully taken into account the potential long-term adverse affects of reduced credit card transactions.
'The cheerleaders for the industry will be wrong,' Ader said. 'This will dramatically curtail business for everyone,' he said, though larger companies are in a better position to withstand the impact.
Citibank, Wells Fargo, Bank of America, MBNA and Chase Manhattan Bank are among the major banks that have blocked online gambling transactions using their cards.
This month, Citibank reached an agreement with the New York Attorney General to block Internet wagers. The agreement, which included a settlement of $400,000 to gambling counseling groups, ends Attorney General Eliot Spitzer's investigation of the issue.