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

14 September 2007

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.

Online Casino News courtesy of InfoPowa