PartyGaming settles with US authorities

[jetset]

PARTYGAMING REMOVES U.S. THREAT OF ONLINE GAMBLING PROSECUTION

$105 million the price for relief from retroactive prosecution

Shares in the London-listed online gambling group PartyGaming are expected to soar following the group's announcement Tuesday that it has reached a settlement with the US Department of Justice, removing the threat of prosecution for pre-UIGEA activities.

The cost of removing the cloud of possible action by the Americans is $105 million, payable as follows:

* 10 April 2009 - $5m
* 30 September 2009 - $10m
* 31 March 2010 - $15m
* 30 September 2010 - $15m
* 31 March 2011 - $15m
* 30 September 2011 - $15m
* 31 March 2012 - $15m
* 30 September 2012 - $15m

It is considerable cheaper than the $300 million paid independently by one of the founders, Anurag Dikshit, in his personal capacity earlier this year (see previous InfoPowa report.)

In a statement, PartyGaming said that a non-prosecution agreement had been concluded with the US Attorney’s Office for the Southern District of New York (the ‘USAO’) following protracted negotiations.

Under the terms of the Non-Prosecution Agreement, the USAO will not prosecute PartyGaming plc or any of its subsidiaries for providing Internet gambling services to customers in the US prior to the enactment of the Unlawful Internet Gambling Enforcement Act on 13 October 2006.

As part of the agreement, the company has accepted a Statement of Facts regarding its business activities prior to the enactment of the UIGEA and has agreed to pay $105 million, payable in semi-annual instalments over a period ending on 30 September 2012. Such payments will be made from the Group’s existing financial resources.

Key elements of the Statement of Facts are:

* From 1997 until 13 October 2006, PartyGaming offered Internet gaming to players located in the US, including real-money poker and casino gaming. On 13 October, 2006, the day the UIGEA was enacted, the Group voluntarily exited the US market.

* Prior to 13 October 2006, certain of the US customer transactions intended for PartyGaming that were processed by third parties, and other gaming and payment-related activity, were contrary to certain US laws.

* PartyGaming has agreed to maintain, with respect to its operations, a restriction preventing Internet gambling services from being provided to customers in the US in violation of the prevailing law of the US or any jurisdiction within the US.

* If requested by PartyGaming, the USAO will bring the co-operation and remedial actions of PartyGaming to the attention of other licensing and regulatory authorities.

Commenting on today’s announcement, Jim Ryan, Chief Executive Officer said:

“The resolution of our position with the US authorities marks an important day for PartyGaming. It has been a long and complex process but we have reached an amicable solution with the USAO that makes commercial sense for our business and is in the best interests of shareholders. We are now well-placed to seize organic as well as strategic opportunities that previously were beyond our reach.”

[brucefinaldi]

I am curious if this is the first step taken in preparation to entering the US again.
Maybe PartyGaming is expecting Poker to be legalized very soon in the US.

[jetset]

Although the prospect of legally getting back into the USA and making the really big bucks again is obviously attractive, this is unlikely in the short term, I feel.

Party Gaming has said that its priority at present is to remove the cloud of uncertainty that the DoJ action on pre-UIGEA activities represented.

Having achieved that, it becomes a much more attractive stock for investors; it boosts its potential selling or merger price and/or it empowers it to carry out its own M&A strategies more effectively.

This is an interesting article from the FT.com today:

http://www.ft.com/cms/s/0/fc5dbc6c-2...44feabdc0.html

I'm sure we'll see acres more newsprint on this as various publications examine the implications of the deal.

[Jacky]

Sounds about right to me :-)
There is a warm breeze and few signs in the horizon
indeed legalizing online gambling is inevitable ...Poker will probably come first
The new US administration would not ignore a $50B in Taxes...First swallow? I guess we will soon find out.

[grazza7777]

surely you jest, anurag dikshit, thats not a real name is it, must be a bodgy name, a misprint or a handle. grazza7777

Sounds about right to me :-)
There is a warm breeze and few signs in the horizon
indeed legalizing online gambling is inevitable ...Poker will probably come first
The new US administration would not ignore a $50B in Taxes...First swallow? I guess we will soon find out.

[jetset]

Here's another take on the situation:

http://www.telegraph.co.uk/finance/c...he-bubbly.html

[jetset]

surely you jest, aragun dikshit, thats not a real name is it, must be a bodgy name, a misprint or a handle. grazza7777

Nope - Anurag Dikshit is his name - an Indian IT expert who was one of the original Party founders with Ruth Parasol and her husband.