Playtech to quit U.S. over gaming ban, shares soar

[DamianDunlap]

LONDON (Reuters) - British gambling software firm Playtech (PTEC.L: Quote, Profile, Research) said on Friday it would stop licensing its software to U.S.-focused operators after legislation to ban online gaming takes effect, boosting its shares.
Its shares closed at 162 pence, 13.7 percent higher than their opening price, after Arbuthnot Securities issued a note reiterating its "strong buy" recommendation.
Playtech said in a statement: "The company has requested that its existing licensees block transactions from players residing in the U.S. as soon as practically possible following the act's implementation."
Last weekend, the U.S. Congress unexpectedly approved a bill to make it illegal for banks to process payments to gambling Web sites, leading most European operators to pull out of the United States and knocking around $7 billion off their share values.



The measure was sent to President George W. Bush to sign into law, which most analysts see as a certainty.
"From the date of the act's implementation, Playtech will waive its right to any license fees with respect to any revenue generated from U.S. players," the group said.
Arbuthnot analyst Paul Leyland said Playtech's reaction was good for three reasons.
"It removes considerable regulatory risk from the stock; It should encourage 'blue-chip' licensees in regulated jurisdictions to trust the platform; It allows the company to focus on the much more diversified European and Asian markets," he said.
Leyland downgraded his forecast of Playtech's 2006 pretax profit by 16 percent to $65.1 million and his 2007 forecast by 60 percent to $39.3 million.
Playtech Chief Executive Avigur Zmora told Reuters on Wednesday the ban would set back the group by one year financially, but it was swiftly rolling out new software for Asian games such as Mahjong and Pachinko.

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