Neteller Survives Debacle, Finds Financial Prosperity

Like much of the online gaming business spurned by the U.S., Neteller has rebounded through foreign markets, turning especially to Asia.

Neteller, a company specializing in online cash and payment transfers which was almost driven out of business by the United States government, has largely recovered from its disastrous 2007 and now has a bright financial forecast for the future.

Neteller was a victim of the ferocious prosecution of the online gambling industry by the federal government. As four-fifths of the company's business involved transfers to and from individuals in ralation to gambling sites, the government arrested Neteller's co-founders in January of 2007.

The Unlawful Internet Gambling Enforcement Act of 2006 had effectively cut banks and credit card companies out of the payment loop for online casinos, leaving the business to third-party transfers with firms like Neteller. 

Once the U.S. crackdown began, Neteller had to admit handling billions of dollars in transfers to gambling sites. In a settlement with the Department of Justice, the company agreed to pay a fine of $136 million, and the company's shares were suspended from trading for six months.

With restructuring and other business costs related to the prosecution, Neteller had to declare losses of $185 million for 2007.

In cost-cutting and streamlining efforts, Neteller sold its central location in Calgary for $33.5 million, establishing itself on the Isle of Man, and cut employees from 1100 to 425.

Like much of the online gaming business spurned by the U.S., Neteller has rebounded through foreign markets, turning especially to Asia. The company has also emphasized developing its "Newteller" system, to help move away from a reliance on gambling sources and develop marchant accounts.

Currently, Neteller has almost a 10% increase in customers outside the U.S. since 2006, and signups so far in this quarter are up 6% over the fourth quarter of 2007. Dividends are expected to be paid out this year, and the cash position is strong.

So, another online business recuperates and steams ahead, while the U.S. stubbornly enforces its prohibition, hurting its own citizenry and revenue stream more than anything else. One can only hope Barney Frank and Jim McDermott get their regulating legislation passed.