A looming US ban on Internet gambling is already scaring off London-listed operators, but the industry will continue to thrive in the hands of private operators in locations like Costa Rica, Antigua and Curacao.
The fear of extradition to the United States has forced UK executives to turn away from their most lucrative market, some selling their US operations to counterparts in and around the Caribbean which have less amenable extradition treaties with the United States.
Sportingbet's chief executive, Nigel Payne, this week reassured Anti-guans the company would not downsize its operations there and is in talks to sell its US-focused business to a private firm.
Leisure & Gaming's USfacing operations VIP and Nine.com are also likely to end up in private hands, with sale talks underway.
Analyst Tejinder Rand-hawa at Evolution Securities said the industry was splitting into two camps: the European-listed companies and those elsewhere looking to exploit the US ban.
"The market will not go cold-dead overnight," he said. "There are huge opportunities, and all the private offshore operators are licking their lips."
US Congress passed a bill to outlaw online gambling this month, with President George W. Bush expected to sign it into law today. Many UK companies immediately announced plans to pull out, wiping $7 billion off their shares.
"US gambling is untenable for London-listed companies, but these US operations are all viable and profitable businesses that have a future," said a source close to L&G.
The US ban will also make it illegal for banks and credit card companies to process payments to online gaming companies. But no doubt there will be operators that spring up to handle the payments," said Randhawa.
About 170 websites have declared their intention to stop accepting US players.
The vast majority have done so since Congress passed the act, according to gaming website Casino City, which expects 10 to 15 per cent of the world's 2,700 or so gaming websites to eventually block US customers.