Expensive legality

[jetset]

WILL PARTY AND 888 HAVE TO PAY THE U.S. PIPER?

UK financial site reports that American enforcers may impose a heavy price for legality

The British financial news site ThisIsMoney.co.uk is reporting that unidentified sources have speculated that the US Department of Justice could try to recoup all profits made by online gambling groups 888.com and Party Gaming.com in the United States prior to their exit following the passage of the Unlawful Internet Gambling Enforcement Act.

The site estimates that this could amount to nearly $900 million (£445m) in the case of PartyGaming and $120 million for 888.

Such a disgorgement would severly hamper the companies' financial viability, but it is by no means certain that they would be prepared to pay such a high price, the journal opines, revealing that sources close to both companies said neither would be prepared to sign a blank cheque which could effectively put them out of business overnight.

One alternative may be a shared disgorgement by both the companies and the principal founders and owners, to whom large dividends constituting the bulk of the profits have apparently been paid. PartyGaming has allegedly paid 90 percent of its US profits in dividends and 70 percent, it is claimed, went to the founding shareholders, who still own large stakes in the business.

The two companies were reported earlier this year to have been in discussions with Department of Justice officials (see previous InfoPowa reports)

[cynthial]

Is there no end to the avarice of the DOJ?

The article reports this as speculation but where there is smoke there is usually fire. If they are indeed able to pull this off what does that portend for the groups who continue to make profit from US customers since passage of UIGEA? If the groups who did the "correct" thing in pulling out from the States still face this kind of financial setback as a "Thanks" for following our laws, then the ones who remain are indeed facing a possibly monstrous monetary judgement against them. This whole thing is so unseemly. I am embarrassed.

[Simmo!]

As much as I don't really care for Party or 888 (both have shown their true colours to affiliates in the past) this whole DoJ thing is frightening - I had no idea it had gotten as bad as this in the US. From the outside, it simply looks like extortion.

One thing this does prove is that all that "American Values" and "moral" bullshit from Leech, Goodlatte, Kyle & Frist was just that. If anyone ever doubted it was about the money, they needn't doubt anymore.

No need to be embarrassed tho Cyn: it's hardly your fault it turned out like this But you and your compatriots do have my sympathies

[Mousey]

Intimidation, coercion, and extortion. The DoJ now has it down to a science. I've said it till I know ya'll are tired of seeing me post it.

And I'm with Cyn -- it's embarrassing .... but it also infuriates me that at least one these casinos won't tell the DoJ to take a flying leap. There is no stopping the Feds until some big casino or bank stands up and tells Gonzales and his stormtroopers to go themselves.

[winbig]

How do they figure these groups made $1B combined in the time between the UIGEA and when they withdrew from the USA?


I agree....extortion

I'm happy to say that I didn't vote for any of these idiots that have, and are supporting the UIGEA.

[jetset]

IS 888.COM BRACED FOR A U.S. CLAW-BACK?

Speculation that pre-UIGEA penalties may be demanded

The subject of talks between the US Department of Justice and major online gambling firms like 888.com and Party Gaming on pre-Unlawful Internet Gambling Enforcement Act activities resurfaced over the weekend in a speculative article by the The Independent newspaper in the UK.

Timed just before the release of 888.com's interim results tomorrow (Monday) the article opines that the company will face a barrage of questions on speculation that the US authorities are planning to claw back up to $120 million (GBP60 million) from the firm.

The Independent piece reprises the history of the issue, claiming that the US Department of Justice is gunning for operators under the UIGEA. Despite its withdrawal from the US market, 888.com and its rival Party Gaming may be forced to cough up profits made before the online gaming ban became law, it speculates.

According to the article, analysts are expecting 888.com to report a pre-tax profit of $16.4 million on revenues of $94.6 million. It is estimated that full-year revenues for 2007 will be roughly $198 million, up from $157 million in 2006.

At the time of America's ban, over half of 888.com's revenues came from the US, but the company only reduced its headcount by 25 percent. Analysts believe that 888.com's growth is now underpinned by a strong appetite for internet gambling in the UK, particularly among women.

Party Gaming recently released strong results (see previous InfoPowa report) that indicated that business levels were almost back to pre-UIGEA levels despite the banning of all US players.