Attracting wide New Zealand media comment over the weekend was the news that the New Zealand Green political party wants a new online gambling site shut down because it "threatens the viability of the racing industry."

Green Party member of parliament Sue Bradford is at the heart of the row, claiming that an online gambling site, Race-O New Zealand, 'might' be illegal because the Gambling Act passed three years ago outlawed online gambling within New Zealand.

It also made betting on horses illegal unless bets were laid with the TAB, she said.

"Such online activities are illegal not only for the operators but for the participants," said Bradford. "Perhaps to circumvent these legal restrictions, Race-O is the trading name of a company registered in Costa Rica, while its gaming and betting license has been secured within the Kahnawake Indian nation near Montreal, Canada.

"The Government should immediately close down the site, and pursue prosecutions vigorously if laws have been broken."

The betting site, whose original investors included leading breeder Sir Patrick Hogan and former top trainer Dave O'Sullivan, is being investigated by the New Zealand Department of Internal Affairs.

Berri Schroder, a part-owner of Melbourne Cup winner Brew, is a Race-O (NZ) director.

Race-O is registered in Costa Rica in central America and its betting license has been secured from the autonomous Indian territory of Kahnawake in Canada.

Bradford said sites like Race-O New Zealand could threaten the racing industry because the TAB monopoly guaranteed that gambling profits were returned to the industry "in a reasonably accountable manner".

"Racing seems already to be in such a state of decline that it is reduced, shamefully, to taking the proceeds of pokie money to bulk out major stakes," she said.

"It would be a pity if the advent of online gambling sites like Race-O should even further undermine the distribution system maintained by the TAB through the auspices of the Racing Board."

It is illegal to set up an internet betting website in New Zealand, and the website has angered the Problem Gambling Foundation, which told the Sunday Star-Times it was a deliberate attempt to get around the ban.

The betting company offered a $1 million prize pool for those who selected the winners of eight races at Matamata on Saturday.

An attempt was made to launch Race-O nearly 13 years ago but was rejected by New Zealand racing officials on the grounds that it was basically little more than an extension of pick6 betting (selecting the winners of six races).

Race-O has no association with the New Zealand TAB. Undeterred, Race-O has said it would continue to offer a $1 million prize pool on future events.

Another payment option closes its doors to online gambling. Canadian online gamblers who use the FirePay e-wallet will be scrambling to mobilise their funds following a surprise notification from the company just before the weekend.

The online payments processor has now extended its ban on US online gambling transactions to Canadian consumers, according to an on-site notice this week.

The notice reads:

Effective February 21, 2007, FirePay www.firepay.com will no longer allow Canadian consumer payments to online gambling merchants.

Effective February 28, 2007, FirePay www.firepay.com will no longer allow Canadian consumers to receive payments from online gambling merchants.

Unlike their US counterparts, who are having serious difficulties in retrieving monies from e-wallets as a result of US Department of Justice activities, Canadian Firepay account holders will at least have time and alternative channels to withdraw their account balances. The notice includes guidance on non-gambling exit options.

All Canadian FirePay account holders will continue to be able to make purchases and receive payments from non-gambling online merchants, as well as to "Deposit From" and "Withdraw To" their Canadian bank account.

Click here for a listing of non-gambling merchants that accept FirePay: http://www.firepay.com/_stores/default.asp

For any questions regarding these deadlines or this policy, please email info@firepay.com.

Although online poker sites like Poker Stars ceased accepting US player deposits from FirePay last October 13, these sites will now find Canadian players lost to them from the FirePay route as well. FirePay is a subsidiary of Optimal Group Inc., a NASDAQ-listed company with over $6.5 billion in worldwide processing annually.

Gambling software producer CryptoLogic Inc. said yesterday its fourth-quarter profit dropped 70.6 per cent to $1.7 million (U.S.) in its first financial performance report since the U.S. government declared a ban on online gambling.

For the ended Dec. 31, the company's earnings were equivalent to 12 cents per diluted share, down from $5.8 million, or 43 cents per share, in the same period last year.

Asian gambling stocks, industry laggards last year, are setting records as investors bet on new casino projects in Macao and Singapore.

Shares of Malaysia's Genting, the builder of Singapore's second casino, and Australia's Aristocrat Leisure, the world's second-largest slot-machine maker, are each up more than 40 percent in the past 12 months.

Even after their gains, Asian casino stocks are less expensive relative to earnings on average than for such U.S. gambling companies as Las Vegas Sands and MGM Mirage. Asian stocks are set to catch up, said Charles Norton, who manages the $70 million Vice Fund in Addison, Texas.

"One of the reasons why we like the gaming sector as much as we do is just Asia," said Norton, whose fund buys alcohol, tobacco and firearms stocks along with gaming companies. "It's an enormous driver."

He holds shares of Melco PBL Entertainment (Macao), a partnership between Australia's Publishing & Broadcasting and Melco International Development that is building Macao casinos.

The eight gambling stocks in the Morgan Stanley Capital International Asia-Pacific Index had an average increase of 21 percent last year. The USA Index, composed of six gambling stocks, posted an average gain of 57 percent last year.

Macao, the Portuguese enclave that reverted to Chinese control in 1999, passed the Las Vegas Strip as the world's biggest gambling market in 2006. Genting last month said it planned to build a casino in Macao. The 28-square-kilometer (11-square- mile) area is the only place in the world's most populous nation that allows casino gambling.

U.S. gambling shares benefited last year from Asia casinos. The Las Vegas operator Steve Wynn, the MGM Mirage's Kirk Kerkorian and the Las Vegas Sands's Sheldon Adelson capitalized earlier than Asian companies on the demand in Macao. U.S. companies opened gambling houses after the Hong Kong billionaire Stanley Ho in 2004 lost his four-decade monopoly to operate casinos in Macao.

The 10 biggest gambling companies in Asia by market value sell on average for 19.4 times earnings. The 10 largest U.S. casino owners trade at an average of 34.9 times earnings, excluding Wynn's Wynn Resorts, whose value is 5,395 times earnings because the five-year old company was not profitable until last year. Wynn Resorts is opening a $1.2 billion Macao casino this year.

Macao's gambling regulator said Jan. 23 that revenue surged to 55.9 billion patacas, or $6.95 billion, in 2006, a 22 percent gain on the year earlier. In the United States, Nevada has yet to release full-year figures for Las Vegas's revenue. Morgan Stanley estimates the city's 2006 gaming revenue at $6.5 billion.

The possibility that China might relax gambling restrictions elsewhere in the country could hurt the industry, said Matt Hoult at ABN AMRO Asset Management. Other risks include rising costs for building and maintaining the casinos and competition among operators as venues open.

"It's a bit like the tech boom in that everyone says they've got these fantastic earnings coming through so let's get exposed to it," said Hoult, who helps manage the equivalent of $4.1 billion at ABN AMRO Asset Management in Sydney, and holds fewer gaming stocks than are represented in benchmarks. "But the supply of gambling facilities may be far in excess of what it's capable of supporting in five to 10 years time."

Genting, Asia's biggest casino operator, is valued at 19.9 times earnings, while Las Vegas Sands, the world's biggest casino operator by value, trades at 75 times. Las Vegas Sands runs Sands Macau, the world's biggest casino when ranked by the number of tables.

Publishing & Broadcasting, Australia's biggest media company by market value, trades at 21.9 times earnings. The Sydney company, which now gets 55 percent of its revenue from gaming investments, is a partner in Melco PBL with Ho's son, Lawrence. Melco PBL raised $1.14 billion in a share sale in December.

MGM Mirage, the world's second- largest casino company by market capitalization, is valued at 34.8 times earnings. The Las Vegas company is building a $1.6 billion resort in Macao that is due to open this year.

The next gambling venue that will open up is Singapore. Genting, based in Kuala Lumpur, jumped 54 percent last year and led gains in Asian gaming stocks. The company, controlled by the billionaire Lim Kok Thay, won a second Singapore casino license in December, joining Las Vegas Sands as the only operators in the city for at least a decade.