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Wire Act Clarification May Boost Foreign Online Gambling Stocks

This week has already been a strong one for US-based gaming companies, with news of the clarification of the 1961 Wire Act sending stocks soaring on Tuesday. In the long run, however, it may be the International gaming stocks that see the biggest jolt thanks to the Department of Justice's opinion relating to the Wire Act.

On Monday, a bombshell was dropped on the Internet gambling industry when it was revealed that the Justice Department released a thirteen page legal opinion defining the Wire Act. The opinion stated that the Wire Act referenced solely sports betting, and the intent was to stop sports betting through telecommunication. For years, the US government has contended that poker and casino games were part of the Wire Act, but that notion was finally dispelled with the opinion.

The results of the opinion could be far-ranging, with some gaming analysts believing that it will be foreign companies that benefit most by the ruling. Without a fear of violating US laws, it is likely that foreign companies may soon again open their sites up to American gamblers.

Just the idea of regulated online gambling had US investors jumping on US-based gaming stocks Tuesday afternoon. By the close of the day, most of the companies expected to gain licenses to operate online casinos had their stock rise. It is a trend that some believe will continue in the near future.

On Tuesday, MGM Mirage rose almost five percent, to $10.42. Wynn Resorts and Las Vegas Sands also rose, three and one percent, respectively. Wynn stock closed at $113.53, remaining the top gaming stock in the US, while Sands stock finished the day at $43.99.

LVS CEO Sheldon Adelson came out last week against regulating online gambling. Adelson claimed that proper technology did not exist to keep underage gamblers off the online sites. The opinion by the Justice Department may cause Adelson to change his stance, with his company being possibly one of the few American gaming companies with the clout to gain online licenses.

Boyd Gaming, a company that has already started forming partnerships with overseas online gaming companies, had its stock rise by almost ten percent Tuesday. The stock rose almost a full dollar, closing the day at $7.63. Pinnacle Entertainment stock was up to $10.38, a rise of 2.98%.

International companies such as Digital Entertainment have been holding steady on the UK market, and the company is poised to re-enter the US market once the laws are further defined. Bwin is a leading online casino provider in Europe and in other jurisdictions around the world where Internet gambling is legal.

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