FT: <> As [Michael Bloomberg, the mayor of New York,] should recall from his days at Salomon Brothers, President John F. Kennedy helped to revive the City of London in 1963 by imposing a tax on US investment in foreign securities. That made the international bond market move to London, allowing the City to regain its 19th century status as Wall Street's rival in capital markets.

Now US regulators are doing the same thing with another market: online betting and gambling. It does not sound like a very worrying loss for Wall Street given its strong position in equities, bonds and derivatives. But Mr Bloomberg should watch out: in an arena of financial innovation that is rapidly converging with other forms of trading and investment, New York is drifting behind London.

As with international bonds, the sheer size of the US domestic market should give US companies and institutions an edge in online betting. After all, some 45 per cent of online gambling revenues come from American players. But federal anti-gambling laws have been applied so strictly that companies have been driven offshore or towards Europe's biggest financial centre.

London is experiencing a wave of initial public offerings from gaming and betting sites. PartyGaming, a Gibraltar-based company that operates PartyPoker, the dominant online poker site in the US, last week announced plans for an offering that may value it at more than £5bn ($9bn). Betfair, a fast-growing online betting exchange, could float for up to £500m. <> The astonishing growth of online poker - Dresdner Kleinwort Wasserstein, a financial adviser to PartyGaming, estimates that the game's $1.4bn (£763m) annual revenues will rise to $5.9bn by 2008 - shows what happens when all inconveniences are removed. |Source, $ |