City firms falter in face of US online betting ban


Ever since President Bush signed a law in October that effectively outlawed online gaming in the US, internet gambling companies and the firms that represent them in this country have been in turmoil.

The Citys most prominent firms, including Herbert Smith, Skadden Arps Slate Meagher & Flom and Slaughter and May, thought it safer not to act at all for online gaming entities and shunned the sector.

Then there were those firms such as Norton Rose whose stance was cautious, but not as extreme. We review clients on a case-by-case basis, said a spokesperson at Norton Rose. However, despite bringing the company to AIM, the firm did not act on Betcorps sale of operations in late October for a paltry 4.8m to Costa Rican-headquartered Bodog (that figure is a fortune when compared with Sportingbets proceeds of its US assets for a paltry $1).

Australian stalwart Minter Ellison advised Betcorp, with corporate partner Nicholas Broome stating that the firm would continue to represent clients in the online gaming sector as long as they had no US operations.

A couple of City firms have taken a similarly liberal stance, with Freshfields Bruckhaus Deringer and Linklaters still having online gaming clients on their books.

Indeed, some lawyers welcomed the US legislation inasmuch as it cleared up the uncertainty that had hovered since the arrest of BetOn Sports former chief executive David Carruthers in the summer.

The shake-up of the industry could well lead to consolidation among companies always good news for lawyers. If the rumoured talks between and PartyGaming becomeconcrete,then Freshfields would need to decide which client to represent, as both are currently on the firms Rolodex.

As it is, Freshfields advised on its preliminary talks with Ladbrokes, as established betting companies are looking with interest at their online counterparts.Ladbrokes stopped short of announcing any proposed merger with, but confirmed that it had used Slaughters during the talks proof that, although firms may turn their noses up at online gaming companies, their clients may think them very attractive indeed.