PARTY GAMING AN ATTRACTIVE PROPOSITION FOR AMERICAN GIANTS?

22 June 2007

Speculation mounts on the possible reasons for Party Gaming's US talks

Speculation in UK business circles is mounting following last week's disclosure by the London-listed online gambling group Party Gaming that it was involved in discussions with US authorities over its legal position in that country.

Party pulled out of the US market, losing a large chunk of its revenues on the passage of the Unlawful Internet Gambling Enforcement Act last October, and over the past month has reportedly been exploring its legal position regarding US operations prior to the introduction of the UIGEA, which prohibits online gambling financial transactions.

Business analysts have theorised that if Party manages to absolve itself of illegality prior to the UIGEA, it would substantially enhance its M&A desirability as a target for major American gambling companies looking to enter the online gambling industry. Typical of the speculation was this week's buy note from Deutsche Bank, which pointed out that Party Gaming constituted an "easily palatable bolt-on" given current share pricing, and assuming a green light was negotiated with the US Department of Justice. Giant US gambling groups Las Vegas Sands or MGM, or even non-gambling Internet mammoths like Google or Yahoo! could find the possibilities attractive, several industry observers have noted.

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