Using NETeller for TradeSports-InTrade, no more

Chris F. Masse January 18th, 2007

Via Niall O’Connor (Betting Market dot com), NETeller:

Press Release
NETELLER PLC Trading Update

18 January 2007 - NETELLER Plc (LSE: NLR), the leading independent online money transfer business, today issued the following update regarding its position in the US market in the light of the Unlawful Internet Gaming Enforcement Act of 2006 (the “Act” or “UIGEA”) and the Act’s associated anticipated regulations.

US market withdrawal

- 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 18 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.

Recent US developments

- On 16 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 16 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.

Trading highlights

- Following the passage of the UIGEA and as preparations for a withdrawal of services to US residents were being completed, the Group experienced slowing fourth quarter growth in terms of customer receipts and new customer sign ups.
- Average daily receipts from customers in Q4 2006: US .75m; average daily new customer sign ups for Q4 2006: 3,493; total customers at 31 December 2006: 3,526,325.
- Active customers in Q4 2006: 640,701, with a growing percentage from outside of the United States.
- Revenue for the full year 2006 expected to be between US$ 255 million and US$ 260 million.
- Continued focus on geographic diversification through further product launches in response to customer and merchant demand, in particular in Europe and Asia.
- Realignment of Group’s cost base commenced in Q4 2006.

Voluntary withdrawal from US

The Board today confirms that the Group has voluntarily ceased processing funds transfers between NETELLER e-wallets and online gambling merchants on behalf of US residents. This decision represents the culmination of a series of deliberations over recent months by the Board which, in light of impending regulations related to the Act, believed that NETELLER’s position in the US market was no longer sustainable. Since the passing of the Act, the Company has been working diligently on a programme of operational and technical planning measures and procedures to allow implementation of any such decision at the earliest opportunity. NETELLER has committed to an orderly withdrawal for the benefit of its customers and will endeavour to maintain a high degree of service throughout the process.

With immediate effect, as of today Thursday 18 January 2007, at 12:01AM GMT, US resident customers were no longer able to transfer funds using their NETELLER e-wallets to or from any online gambling site.

In line with the Group’s standard business practices for all customers, the funds of US resident customers are held in segregated trust accounts and are fully secure and will be available for withdrawal by customers, on demand. The ability to withdraw funds will exist regardless of the customer’s location or ability to transfer to any site. All US resident customers will continue to be able to use their NETELLER e-wallet accounts to safely transfer funds to and from non-gambling merchants and are not required to close their accounts or withdraw their funds.

NETELLER 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.

In order to be able to support this US withdrawal, NETELLER has dedicated the last few months to developing product enhancements to its software platform in order to be able to block automatically transfers to online gambling merchants from US residents. These features are now fully deployed and integrated into the Group’s core platform.

Today’s updated position with respect to the US market leaves the Group able to focus on its continuing business and the opportunities available in the growing markets of Europe, Asia and the Americas outside of the United States. NETELLER remains focused on developing its business in line with its stated strategic objectives, including geographical and product diversification for all markets. The Group will continue to launch localised services within the global market and a number of new product launches are scheduled for early this year.

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