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Gambling Law Crushes CryptoLogic

The company's shares sink 27%.
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saw its shares tumble after the maker of Internet gambling software said licensees of WagerLogic, its licensing unit, will no longer take wagers from U.S.-based players.

The company on Monday cited new legislation expected to be signed by President Bush that outlaws the processing of financial transactions in the U.S. online gambling market.

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CryptoLogic tried to take an upbeat view, saying it has spent five years shifting its revenue base to European markets and that it's "positioned for long-term profitability and growth." Investors weren't as optimistic, sending shares of CryptoLogic sinking 27% to $16.10 in early trading.

"While the new U.S. developments will be a challenge for the whole industry, our company's diversification, strong balance sheet, thriving European customers and potential new business in emerging markets enable us to face the future with confidence," the company said.

More than 70% of its licensees' revenue now comes from outside the U.S.