Microgaming confusion

Conflicting reports, exacerbated by confusing communications to affiliates from some managers at Microgaming-powered groups, and what appeared to be restricted access to the Microgaming website, all combined as the week ended to create alarm regarding the US intentions of the software provider and its licensees.

The largest of the companies still offering online casino action to (some) US players, Microgaming licensees, and the software provider itself, featured with other domain owners in court documents filed in Kentucky recently as the state tried to curtail Internet competition for its land gambling interests.

In emails to affiliates, some casino managers and affiliate administrators emphasised that the operators had requested that Microgaming halt new US registrations, and this would come into effect on November 10...but that existing players would not be affected if they were not resident in the 13 "banned states" which expressly prohibit online gambling. The state of Kentucky has now been added to this list, presumably as a consequence of the domain hi-jacking attempt by that state (see previous InfoPowa report).

At least two other groups said that in addition to the new registrations ban on November 10, they would be closing their doors to all US players effective December 1st 2008, and urged affiliates to switch their marketing focus to other regions.

Adding to the alarm and speculation were reports that the Microgaming website was down, although it later transpired that it was accessible by most US players but not those in Nevada, Georgia or Tennessee. The reasons for this are not known.

Microgaming itself remained silent, although unofficial sources indicated that the Isle of Man-based company could be planning to issue a statement on Monday - the cut-off date for new registrations. Hopefully this will bring some clarity for players, affiliates, operators and industry media alike.

Speculation that the move may be connected with recent reports that the newly drafted UIGEA regulations were forwarded to the US government's Office of Management and Budget on October 21st have been discounted as unlikely. The proposed regulations are now open to review for sixty days and are still the subject of discussion, and have been under the spotlight of public debate and litigation for many months.

In situations such as this, speculation runs rife and has included assertions that Microgaming is about to go public (unlikely), or is in the first stages of a total pull-out of the US market. The latter theory appears to have the most traction, with proponents reasoning that merely restricting new registrations whilst allowing existing players to continue does not make sense if the motive for the exit is the increasing difficulty of doing business in the USA. The costs of payment processing and legal difficulties affect the administration of new and existing players equally.

The uncertainty created by the current situation is not good for business, as players become anxious about the safety of their deposits and account balances in the event of a sudden closure. If such a closure is inevitable, it behooves Microgaming and its licensees to communicate clearly and effectively...and set up an orderly retreat with sensible timelines.

Hopefully there will be more clarity on this early next week.

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