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HEADLINE: Ladbrokes, MGM enter Online Poker, Gaming Merger Talks

Body:
UK's Ladbrokes and USA's MGM Mirage, two of the world's largest gambling groups, have begun exploratory takeover talks with online gambling companies whose stock value plummeted with the passage by US Congress and signing into law of the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). (help legalize online poker)

Though UIEGA did not change existing laws on what online gambling is illegal, UIEGA does ban banks and financial institutions from handling transactions to online gambling sites from US residents, making it harder for players to complete transactions.

Many articles as well as UK culture secretary Tessa Jowell claim UIEGA will create 'Prohibition II', referring to how 1920's alcohol prohibition did not stop drinking and lead to many shady businesses and crime [the exact opposite of what UIGEA supporters claim they wanted when they campaigned for UIEGA].

Many bloggers predicted that live casinos would move in to takeover financially hurt online companies.

But more controversial bloggers pointed out how live casinos have been large contributors to major architects of the UIEGA. They then questioned whether passage of the UIEGA wasn't an orchestrated step along the road toward regulation of the online gambling industry and dominance by already licensed casino brands whose contibutions gave them political pull. [perhaps Lou Krieger wasn't so far off the mark asking for an Online Poker political action committee (PAC).]

MGM, the world's second-largest gambling group, is understood to have contacted a number of players in the sector, including poker market leader PartyGaming, to discuss a takeover.

PartyGaming was already rumored to be in merger talks with 888 Holdings.

Talks are in the early exploratory stages. Bankers involved with MGM stressed the US company's interest was serious. They stressed that Las Vegas-based MGM wants to buy a market leader and is considering a move on any group created by a merger of PartyGaming and 888 Holdings, which are said to be in negotiations, along with Sportingbet.

888 Holdings was forced by rumors to issue a statement to the London Stock Exchange admitting it had been "very active" and was talking to "more than one party".

London's 'The Business' published a report this week saying "that one party involved in these talks is Ladbrokes, which refused to comment except to say that it was watching the situation."

Though Ladbrokes has online poker and casino sites, their sportsbetting arm is by far their financial strength. Ladbrokes has repeatedly stated it wishes to expand into European and Asian markets.

888 Holdings has no real sports betting offering. It derived about half its revenues and profits from the U.S. before passage of UIEGA. It has been expanding into other territories, notably the Asian market.

"The truth is that everybody is talking to everybody else," said one source involved in discussions, and that "These things are at an early stage- the US situation only developed a few weeks ago."

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