Billions of pounds have been wiped off the value of online gaming stocks after a controversial move to prevent inter-net gambling in the US.

Shares in the sector tumbled by as much as 80 per cent as investors reacted with dismay to new laws in the United States which ban banks and credit card companies from processing payments to online casinos.

The legislation was a major blow for firms such as Party Poker owner PartyGaming and 888 Holdings, which rely heavily on the US for business.

The two companies said they would suspend business in the US indefinitely once President George Bush signs the Bill into law - a move expected within two weeks.

Yesterday morning, shares in PartyGaming tumbled 61 per cent while 888 was down 45 per cent and Sport-ingbet was off 70 per cent. World Gaming plummeted 80 per cent after it was also hit by the end of takeover talks with Sportingbet, and online money transfer company Neteller fell 60 per cent.

The Unlawful Internet Gambling Enforcement Act effectively stops anyone in the US from placing bets on the internet even if the casino is based overseas, although it does not include horseracing and state-owned lotteries.

Online gaming firms have been under pressure all year from the threat of harsh legislation in the US, although most analysts thought Congress would not have time to approve the Bill. However, the measures were attached at the last minute to an unrelated Bill aimed at enhancing port security, which was passed on Saturday.

It followed the recent arrests of BetonSports chief executive David Carruthers and Sportingbet chairman Peter Dicks in the US over alleged illegal internet gambling on sport.

888 said that the new law would treat internet gaming, "whether sports-related or not, as illegal".

"In the light of these considerations the board has concluded that it is appropriate to suspend participation by USbased customers in activities covered by the legislation," 888 said.

"The company will implement this suspension immediately upon the legislation taking effect and the suspension will continue for so long as the legal situation remains the same."

PartyGaming also said it would halt operations in the US "indefinitely" once the Bill becomes law.

Sportingbet said it was "disappointed" by the decision in Congress to back the Bill, which it said would have "a material impact" on trading.

Sportingbet, which generates 62 per cent of its income in the US, also pulled out of talks to buy rival firm World Gaming because of the law.

World Gaming generates almost all of its profits in the US through websites such as sportsbook.com, sportingbetusa.com, sportsbetting.com and betonusa.com.

Partygaming

The world's biggest online casino and valued at £4.28 billion before yesterday's shares fall. The Gibraltar-based company, founded in 1997, generates three-quarters of its business in the US and operates websites such as PartyPoker.com and PartyCasino.com as well as bingo and backgammon games. Last year it pulled in revenues of £522.9 million and pretax profits of £173.7 million.

888 Holdings

Draws 52 per cent of its bets from the US and runs poker and casino games such as blackjack and roulette on its 888.com and PacificPoker.com websites. Is also based in Gibraltar and was valued at £493.9 million before yesterday.

888 posted pretax profits of £25.7 million for the first six months of the year - almost as much as the £26.9 million it made in the whole of last year.

As part of its plan to attract more players from outside the US, 888 sponsors Middlesbrough FC, Sevilla FC and Toulouse FC and the World Snooker Championship.

Sportingbet

Hit the headlines last month when then chairman Peter Dicks was arrested at JFK airport in New York under existing laws governing "gambling by computer".

He was freed last week when New York governor George Pataki refused to extradite him to Louisiana - the state which issued the warrant for his arrest - because offshore inter-net gambling is not a crime in his state. The arrest sent shares in the London-based company tumbling from around 240p to 144p and they plummeted a further 60 per cent yesterday morning.

Sportingbet generates about 70 per cent of its profits from US punters and its businesses include Paradise Poker and betting on American sport.

World Gaming

Was dealt a double blow yesterday after Sportingbet pulled out of takeover talks because of the new legislation.

Sportingbet was planning a £56.6 million bid for World Gaming but said yesterday discussions between the two firms were over. It added to the gloom caused by the the Internet Gambling Enforcement Act and sent World Gaming shares down 80 per cent.

The company runs websites such as sports book.com, sportingbetusa .com, sportsbetting.com

and betonusa.com and banked profits of £4.7 million in the first half of the year.

Neteller

Provides a secure online funds transfer service, used by more than three million customers in 160 countries. The company, which processed more than £3.85 billion of transactions in 2005, warned the Bill may have a "material adverse effect" on its US-facing business, but said it needed more information about what the regulations will stipulate. NETeller, which is headquartered on the Isle of Man, was founded in 1999 and until today's share price slump of 59 per cent was one of the largest companies quoted on the London Stock Exchange's AIM market. Betonsports

Shares are currently suspended after it fell foul of America's Wire Act, which outlaws the placing of bets on sporting events via the telephone. The company terminated the contract of chief executive David Carruthers following his arrest on racketeering charges while on his way to the company's headquarters in Costa Rica. BetonSports has already taken steps to close its US-facing operation after deciding it was no longer viable.