Neteller Withdraws from USA Gambling Processing

Neteller Withdraws from USA Gambling Processing 0001

Neteller plc, the Isle of Man based and UK quoted processor of online money transfers, has announced its withdrawal from the US gambling market with effect from today's date.

Neteller says it is doing this "…in the light of the Unlawful Internet Gambling Enforcement Act of 2006 (the 'Act' or 'UIGEA') and the Act's associated anticipated regulations." Consequently, the following statements are made with regard to Neteller's merchants and customers (the bold emphases are by UK Poker News):

- Withdrawal of US Transfers to Gambling Merchants: The Board confirms that the Group will cease processing online transactions related to gambling for the US market with effect from today in light of the passing of the UIGEA and the uncertainties and likely delays relating to the drafting and implementing of regulations.
- Phased Compliance: This announcement reflects the culmination of a series of deliberations and steps the Group has taken since the passing of the UIGEA in October 2006. Previous steps have included the development of country blocking and instant funds transfer restriction enhancements to the Group's software platform.
- Timeline: As of today Thursday 18th January 2007, at 12:01AM GMT, US resident customers were no longer able to transfer funds using NETELLER's services to or from any online gambling site.
- Continued Safe Choice: Customer funds, including those of US residents, are held in segregated trust accounts and are fully secure and will be available for withdrawal by customers, on demand. US customers continue to be able to use their e-wallet accounts for non-gambling transactions.
- Group's Future Focus: These decisions will allow the Group to focus on opportunities available in the growing markets of Europe, Asia and the Americas outside of the United States.

Neteller also confirms that customers not resident in the US are not affected at all by this withdrawal from the US market. The Group will continue to operate its non-US business as normal, maintaining existing customer and merchant support across all the markets it currently serves.

With regard to the recent legal issues involving the charging of two of Neteller's founder shareholders and former directors, Neteller plc has stated:

- On 16th January 2007 shares in the Company were temporarily suspended pending clarification of the situation surrounding the detention, by US authorities, of Mr Stephen Lawrence and Mr John Lefebvre, two founder shareholders and former directors of the Company.
- On 16th January 2007 the US Attorney's office in the Southern District of New York charged Mssrs. Lawrence and Lefebvre with conspiring to transfer funds with the intent to promote illegal gambling. The charges are a matter of public record. As of this point, neither of Mssrs. Lawrence nor Lefebvre has responded to the charges. The federal authorities allege as one of the bases in the complaints against Mssrs. Lawrence and Lefebvre that NETELLER's involvement in handling financial transactions between gambling customers in the United States and numerous offshore online gaming businesses constitutes illegal conduct.
- As noted above, today's withdrawal from the US market by NETELLER is the culmination of months of careful planning. Along with this action, the Group is actively assessing what further steps it may take in light of the two arrests made earlier this week to clarify the Company's position in this matter.
- Pending further clarification of this the shares of the Company will remain suspended.

Neteller plc has also updated the market with its trading performance in light of the UIGEA and other factors. Amongst the trends, it states that "…the Group experienced slowing fourth quarter growth in terms of customer receipts and new customer sign ups…", and that average daily receipts from customers in Q4 2006 were $5.75m, average daily new customer sign ups for Q4 2006 were 3,493 and total customers at 31st December 2006 were 3,526,325.

Active customers in Q4 2006 amounted to 640,701, with a growing percentage from outside of the United States. Revenue for the full year 2006 is expected to be between $255 million and $260 million.

Neteller is continuing its focus on geographic diversification through further product launches in response to customer and merchant demand, in particular in Europe and Asia. Realignment of the Group's cost base also commenced in Q4 2006.

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