BRIT PRESS SPECULATES ON FRENCH CRACKDOWN

2 March 2007

Paris interviews with 20 online gambling companies reported

UK newspaper The Guardian has speculated that the request by French authorities for interviews with a reported 20 online gambling company executives could presage a US-style crackdown on the industry in that country.

And staff writer Simon Bowers writes that Party Gaming quietly closed its website to French customers last Friday without telling investors. Just three days later one of the firm's largest shareholders sold 123 million shares worth some GBP 50 million (see previous InfoPowa bulletins).

Bowers goes on to claim that 888 Holdings and others are also believed to have frozen efforts to target the French market.

Whilst Party Gaming is apparently not among those with whom the French have requested an interview, the company reports its full-year results tomorrow, and refused to comment to the Guardian on its reasons for the French shutout.

The Guardian article opines that France's position appears to be at odds with European Union competition rules on gambling, which many offshore operators hope will be strengthened next week with publication of a landmark judgment from the European court of justice.

But industry insiders are wary that France has stepped up lobbying efforts in Brussels, fearing that open competition - particularly from online firms based in offshore tax havens - could destroy the PMU French monopoly on which domestic horse racing relies for funding.

One industry source consulted by the Guardian estimated that France could generate between 5 percent and 10 percent of Party Gaming's continuing revenues following the closure of its US business last autumn.

Another suggested France must contribute less than 5 percent to revenues or Party Gaming would have been forced to make a stock market announcement. The company was one of the first online operators to provide betting services via a French language website. Last summer it acquired sports betting site Gamebookers, a well-established brand in France. Industry insiders said Party Gaming's French business had been viewed as having huge potential for growth.

The company's closure to French customers came on the day letters were received by online operators requesting executives to attend interviews in France. Those contacted are believed to include Unibet, which has targeted the French market through its Mr Bookmaker business.

The letters invite executives for interview, but the authorities are understood to have made clear an alternative approach might be to issue arrest warrants.

Last September the founders of Bwin, Manfred Bodner and Norbert Teufelberger, were arrested by the French authorities at a press conference they had called to publicise a shirt sponsorship deal with AC Monaco. They were bailed days later but told they could face up to three years in jail if found to have contravened laws on gambling advertising.

Afterwards, French football league officials placed a ban on online gambling firms offering shirt sponsorship. As a result, AC Monaco was forced to drop its shirt deal with Bwin. Similar tie-ups linking 888 with the Toulouse team and Gamebookers with Nantes were also dissolved, the Guardian reports.

London-listed 888 Holdings confirmed Guardian reports that non-executive director John Anderson, who was chief executive of the business until the end of last December, had received a request from the French authorities. He is expected to attend a meeting on March 13 to put the company's case.

Industry insiders were concerned to see inquiries extending beyond sports betting - which 888 does not offer - to online poker or casino games.

Party Gaming insisted no letter requesting an interview had been received. Nevertheless its shares fell 9.4 percent Tuesday. It is unclear which Party Gaming shareholder was behind Monday's share placing but the company must announce it this week.

The only investors with such large holdings are the firm's four founders - Vikrant Bhargava, Anurag Dikshit, Ruth Parasol and her husband Russ DeLeon - as well as Fidelity and the Bermuda and London-based hedge fund Orbis. It is understood not to be Ms Parasol or Mr DeLeon.

Online Casino News courtesy of InfoPowa

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