Gambling News by Gambling Headquarters

Software developer CryptoLogic Inc. is relocating its head office to a more "friendly" environment in Ireland, highlighting a growing moral divide between North America and Europe over Internet gambling. The Toronto-based company, which makes software that Internet gambling sites run on, yesterday said it will move its head office -- including top executives, human resources, business development and investor relations -- to Dublin in January. The company's chief executive, Lewis Rose, is not relocating for "family reasons" and will step down once a replacement is found. Chief information officer Stephen Taylor is moving . The Dublin office will start with a staff of about 10, eventually growing to about 20, the company said. The majority of Cryptologic's Toronto staff of 250, including its software development team, will stay put. The company will list on London's Alternative Investment Market, and maintain its Toronto and Nasdaq listings. Mr. Rose said the main driver of the move was a desire to be closer to customers. About two-thirds of CryptoLogic's customers are international, with about 60% of those in the United Kingdom and Europe. "If you follow the logic, it's a logical, practical step. It makes sense to be in the same time zone," he said. But he also said CryptoLogic -- whose $104-million in 2005 revenue makes it Canada's fourth-largest application software firm -- wanted to move to a "gaming-friendly environment."

The climate for Internet gambling in North America has turned sour lately. The U.S. House of Representatives in July passed a bill to expand the 1961 Wire Act, which bans gambling over the telephone, to include the Internet. The Senate is expected to move on the bill before it recesses on Oct. 9 for mid-term elections.

Authorities have also carried out a high-profile crackdown over the past few months with arrests in U.S. airports of several British gambling operator executives.

The arrests cast a pall over the industry, causing Britain's Continent 8 Technologies PLC -- 40% owned by the Mohawks in Kahnawake, Que. -- to cancel its initial public offering last month.

"There's no question the U.S. has created a situation of uncertainty," Mr. Rose said.

On Friday, French authorities detained Manfred Bodner and Norbert Teufelberger, the co-CEOs of Austrian betting firm bwin.com Interactive Entertainment AG.

The difference, analysts pointed out, is the French arrests were not for moral reasons, but for alleged violations of the state-granted Internet gambling monopoly of Francaise des Jeux.

The European Commission is investigating whether these monopolies are violating the rights of commercial gambling site operators to run their businesses across the European Union.

In Europe, it's therefore a case of protectionism rather than morality, analysts said.

Europe -- and particularly the U.K. -- is proving to be a panacea for the sector by going in the opposite direction to the United States. Starting next year, the U.K. will license, regulate and tax online gambling, making it "the centre of the universe for online gaming," Mr. Rose said.

Canada has taken a more-European approach in that Internet gambling is allowed, but only provinces and territories have the right to run such Web sites. That has created a grey area for would-be commercial operators and technology providers such as CryptoLogic.