The side effects of a little-known bill President Bush signed this month meant to curb online gambling is being felt all the way in the Valley. The Unlawful Internet Gambling Enforcement Act of 2006, passed by Congress in September, makes it illegal for credit card companies and banks in the U.S. to handle electronic money transactions for gaming websites. While it was designed to prevent kids from gambling online and help solidify previous wire transfer rules, the new law could be devastating for companies like Camarillo-based Electronic Clearing House Inc., which provides payment-processing services for merchants, banks and collections agencies. About 10 percent of the company’s business is generated through a service for Internet merchants that allows customers to have online payment accounts a sort of digital wallet. Problem is, those accounts could theoretically be used on gambling sites, which means they’re now prohibited under the new law. <!– Not so sweet: Cheesecake sales dip. –> Not so sweet: Cheesecake sales dip. Federal regulators have 270 days to determine how the rules will be regulated, but Electronic Clearing isn’t waiting around to see what decision will be made, said Chairman and CEO Jody Barry. “We’re all getting out before the 270 days,” he said, comparing the regulation to prohibition. “It’s just going to be onerous.” News of the law sent stock plummeting for Electronic Clearing House Inc., which until recently was on an upward swing its year-to-date earnings as of this month were up 40.8 percent and it reported revenue of $19.9 million in the second quarter ended June 30. Those numbers will almost certainly change into fiscal 2007 because of the bill, Barry said. “It is definitely coming right off the top,” he said. “It has a significant impact to the bottom line.” Curiously, though, there is a silver lining: the law does not apply to horseracing sites, which are protected as part of the Interstate Horseracing Act of 1978. Electronic Clearing House offers some products for horseracing, which makes Barry optimistic the company might see some up tick in coming months. “We may benefit by seeing more activity. Those gamers have to go somewhere,” he said. It’s also good news for Woodland Hills-based horseracing website owner Youbet.com Inc. CEO Charles F. Champion in a letter to investors Oct. 13 said the horseracing industry has long been critical off offshore gambling sites that allow overseas bets on horse races without a cent going to equestrians or tracks. The new law changes that, and will likely help business, he said. “It sets a strong foundation and is consistent with Youbet initiatives to set high standards for integrity and transparency in all facets of horseracing,” he said. “Online wagering services are to this generation what simulcasting and off-track-betting were to the previous generation.” Still, Barry said he has fundamental problems with the legislation. “The idea that this law tries to eliminate people from giving instructions over the Internet as to how their money will be used in another country seems a little overreaching to me,” he said. “I was definitely surprised.” In Other Youbet.com News Youbet.com had two other reasons to celebrate this month. The company acquired privately held television production company Bruen Productions International Inc., headquartered in Colorado for $162,000 and assumed $174,000 in Bruen debt. Then, the company took the No. 3 position in the list of fastest-growing Southern California tech firms by Deloitte and Touche USA. The company reported a 1,305 percent growth from 2001 to 2006. HealthNet Improves The Woodland Hills healthcare provider HealthNet said its latest quarter earnings would likely beat Wall Street expectations. Third quarter earnings are expected to tally about $91 million, or $0.84 per diluted share, the company said. The company had predicted it would make about $0.82; analysts put it closer to $0.83. Meantime, HealthNet’s board of directors voted to restart its stock repurchasing program, under which the company receives $235 million more than the earlier program that ended two years ago. For the Record IHOP Corp., the Glendale purveyor of Rooty Tooty Fresh and Fruity and Pigs in Blankets, reported that same-store sales or sales in stores open for at least a year increased 1.3 percent for the third quarter ending Sept. 13. Sales for the first three quarters were up 3.1 percent. Same-store sales didn’t perform as well at the The Cheesecake Factory Inc., which reported a 1.6 percent drop during the third quarter. Sales grew 11 percent to $325 million for the quarter, the company reported. Woodland Hills-based 21st Insurance Group has started offering auto insurance services to drivers in the Garden State. New Jersey is the 13th state the company serves. Earlier this year, 21st entered the Florida, Georgia and Pennsylvania markets. Staff Reporter Chris Coates can be reached at (818) 316-3124 or at [email protected] .