The world's largest online sportsbook just got a lot smaller.
Pinnacle Sports, which was founded in 1998, announced this morning that it is no longer accepting bets from customers located in the United States. Approximately 60-65 percent of Pinnacle's business has come from the U.S., according to Eye On Gambling.
The decision comes three months after President Bush signed the Unlawful Internet Gambling Enforcement Act.
"If (Internet gambling sites) have any kind of exposure in the United States, or if any of their executives are traveling in the United States, certainly they risk arrest and prosecution for violating the law," said David G. Schwartz, Director of the UNLV Center for Gaming Research.
Pinnacle gained enormous popularity among sports bettors by offering lines with reduced juice and $1 minimum wagers. The site also boasts to have "the highest maximum limits on the Web."
Since the UIGEA became law, the online sportsbook industry has been in flux. While publicly owned Internet sportsbooks such as Sportingbet, William Hill and Ladbrokes haven't taken U.S. bets since the bill was passed, most privately owned companies have continued to accept U.S. play.
Many of those privately held companies, however, have been involved in a series of buyouts and takeovers.
Sportsbook.com, formerly Sportingbet's U.S. facing sportsbook, was sold for $1 when President Bush signed the UIGEA and continues to accept U.S. customers. Bodog, which also continues to accept U.S. players, bought Betcorp and moved its offices to Antigua.
Despite all these shifts, Schwartz says the UIGEA hasn't had much impact on how much people gamble online. This decision by Pinnacle, however, will most likely have ripple effects on the Internet sports betting industry.
"It could either signal the departure of other firms, creating a chilling effect, or it could open the door for other people to come in and take the business that had been theirs," said Schwartz.
Schwartz, however, doesn't think that the move will decrease overall Internet gambling, nor will it affect the sports betting industry in Las Vegas.
"A lot of the people who come to Vegas recreationally aren't necessarily the serious sports bettors who are betting online," Schwartz said. "A pretty big percentage of them are people who are just coming in and placing futures bets for the Cubs to win the World Series or something like that; or, they just happen to be in Vegas for the weekend and they're betting. I think most of the people who are betting online are fairly serious about it."
