|Sportingbet, the online gambling company whose shares have been under attack from short sellers, has relocated its business from Alderney after the island clamped down on companies' taking illegal bets from US citizens.|
Sportingbet is considering Gibraltar as an alternative offshore base.
It has emerged that Alderney's gambling control commission changed the terms of Sportingbet's licence. Although the group's US customers' bets are processed in Costa Rica, Sportingbet could have been in breach of its new terms because the group takes bets from US states where online gambling is illegal.
André Wilsenach, the chief executive of the gambling control commission, said he had imposed a condition on all sports betting licences that their holders were not allowed to accept wagers from the US. Asked how the ban was to be monitored, he said: 'We would expect our licensee not to proceed with advertising in that jurisdiction and to block bets from there.'
Alderney was one of the first jurisdictions to try to attract online gambling groups to its offshore financial centre in the late Nineties. Mr Wilsenach said the review of licences was necessary because the Channel Islands have been under pressure to examine areas where there was a risk the relaxed rules could be exploited by money launderers.
At the same time, he took the opportunity to examine the legal position in the US, where several state prosecutors are acting to clamp down on offshore internet betting.
Eliot Spitzer, the combative New York attorney general, has won the agreement of major financial institutions such as Citibank and, last week, PayPal, the 'e-cash' company, not to process customer transactions with offshore internet gaming sites.
Sportingbet, which described itself as the world's second most profitable internet company after making a pre-tax profit of £5m in the year to March, has seen its shares slump 60% this year, in part because of Mr. Spitzer's clampdown.
The company is under attack from short sellers who have been borrowing Sportingbet shares to sell, in the expectation that they will be able to buy them back at a lower price. Their leader, Simon Cawkwell, is known by private investors by the nickname Evil Knievil.
The switch of the UK business from its historic base in Alderney was mentioned in the company's last results statement in July and attributed to the £4.5m acquisition in June of Sporting Odds, which brought the company 65,000 registered customers in the UK. Loss-making Sporting Odds had been the fixed odds business of Sporting Index, the spread betting group, and was already based onshore.
Sportingbet said it had begun processing all UK bets onshore and paying duty 'in order to maximise the advertising and marketing opportunities into the UK market', which a spokesman said would include taking advantage of the relaxation of advertising laws, expected within the next few years. But Sportingbet said it has also relocated its European business from Alderney to London, 'though the board is currently reviewing its options in this area.'