World Gaming today entered administration and two rival companies sold their US operations for $1 each, just hours before President George Bush formally outlawed internet betting in the US, previously the sector's most important market.

President Bush dashed any hopes of a eleventh-hour reprieve for US-facing online gaming companies when he signed off the Unlawful Internet Gambling Enforcement Act, passing into law legislation that has already thrown the British online betting sector into turmoil.

The Act will deprive World Gaming of nearly all its revenues as more than 95 per cent of its customers are based in the US. The company's shares had already been suspended on London's Aim market on Monday.

Separately, rival Sportingbet, which had earlier pulled out of talks over a possible £56.6 million takeover of World Gaming, today said it had sold its US operations for $1.

Sportingbet has disposed of its US sports-betting, casino business and poker operations to Antigua-based Jazette Enterprises. The deal sees the UK company offload $13.2 million of debt. Sportingbet added that the sale has saved it the $14 million cost of closing down the operations.

Shares in the group fell 9.5 per cent or 6.25p in afternoon trade, to 58.75p. At their peak they had been worth more than 440p.To track the shares click here.

Andrew McIver, Sportingbet’s chief executive designate, said in a statement that the company was "saddened to have to dispose of such a fantastic business as a result of political actions in the US Congress."

However, he added that the sale "prevents significant closure costs which would have been both expensive and time consuming. It also preserves the employment of ... colleagues who have worked so hard to build the US operations into the highly profitable business it is today."

It is understood that Sportingbet decided not to accept anything more than a token payment because it believes that the US ban, would lay the company open to charges of conspiracy and aiding and abetting in the event of a larger payment that would inevitably be deferred until after today's ratification.

Legal sources have already cast doubt on a deal struck last night by Excapsa, the Aim-listed internet gambling software company, which became the first group in the sector to sell its US-facing operations, signing a $130 million agreement with a private Maltese rival.

The sources said the deal was almost certainly illegal because $120 million of the price is deferred until after he law takes effect today.

Leisure & Gaming also sold its US operation for $1, to a management team led by chief Executive Alistair Assheton.

News of the sales came after two of Britain's biggest banks yesterday said they are to stop dealing with internet gambling companies that continue to target US punters.

Barclays and Royal Bank of Scotland (RBS), both of which have big banking operations in the US, have decided that the legal and reputational risks of continuing to deal with US-facing operators are too great.

Although most of the big quoted operators have drawn up plans to close or sell their US operations, many private operators, including Bodog.com and PokerStars, intend to continue dealing with US gamblers.

PokerStars, which has a banking relationship with RBS, insisted that the impending US ban does not alter the US legal situation with respect to online poker. It said that whereas the new law, expected to be signed today by President Bush, effectively outlawed gambling on "a sporting event or a game subject to chance", poker was exempt as a game of skill.

Barclays said: "We are contacting our customers to ensure that they will conduct their operations in full compliance with the legislation."

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