British government has been strongly critical of the U.S. stance on Internet gambling

Shares in European online gambling companies fell as much as 14 per cent Monday on news that U.S. prosecutors had launched a probe into Internet gambling.The U.S. Department of Justice has sent subpoenas to about 15 investment banks across Europe and in the United States, requesting information as part of a probe into gambling companies including Britain’s PartyGaming PLC and payment networks such as Neteller PLC, banking officials said. The banking officials, who spoke on condition that they not be identified by name because they were not authorized to do so, said that the subpoenas were received shortly after Christmas. Dresdner Kleinwort, Deutsche Bank, HSBC and JP Morgan declined to comment on reports they were among the banks to receive subpoenas. Citigroup Inc. and Bank of America Corp. officials did not immediately return calls for comment Monday. The U.S. Department of Justice declined to confirm the investigation. The United States effectively banned online gambling last autumn when the Congress added a provision to a bill aimed at improving port security to make it illegal for banks and credit card companies to settle payments to online gambling sites. President George W. Bush signed the bill into law Oct. 14. Several European-based online gaming companies collapsed after the decision and those still operating continue to reel from the costs of exiting the United States. Sportingbet PLC and Leisure & Gaming PLC both sold their U.S. operations for a token $1. World Gaming PLC directors resigned, leaving the company in the hands of administrators. PartyGaming PLC, the world’s largest online gambling company, and BetOnSports PLC were among the others to suspend all real money gaming activities to customers in the United States. Private offshore operators continue to run such sites as Bodog.com, PokerStars.com and FullTiltPoker.com. Payment transfer companies, which initially appeared immune, have also been forced to reconsider their U.S. business. British-based Neteller, which essentially acts as a middleman between gamblers and offshore betting operations, announced last week that it had stopped handling gambling transactions from U.S. customers because of restrictive legislation and uncertainties about regulations. The company’s move came three days after former directors were arrested and charged in the United States with funneling billions of dollars in gambling proceeds to overseas betting operations. Gambling stocks, already worth only a fraction of their values before the U.S. ban, slumped yet further Monday on news of the probe. In London, Leisure & Gaming shares plummeted 14.3 percent to 10.5 pence (20.7 U.S. cents). PartyGaming shares were 6.5 pence lower at 28.75 pence (56.8 cents). Sportingbet stock slumped 6 percent to 35 pence (69.1 cents). 888 Holdings stock slipped 1. 6 percent to 118.25 pence ($2.34). Neteller shares were suspended last week. The British government has been strongly critical of the U.S. stance on Internet gambling, with Culture Secretary Tessa Jowell likening it to a new form of the 1920s Prohibition on alcohol, warning that it would drive the industry underground.