16 replies to this topic

[FCP Bob]

I wouldn't read too much into this other than Party Gaming taking out a form of insurance so that they don't have any future headaches.


http://news.bbc.co.uk/2/hi/business/7987169.stm

Partygaming reaches US agreement

Online gambling firm Partygaming has reached a legal settlement with authorities in the US.

The agreement ends an issue that has dogged Partygaming since 2006, when the US passed laws that in effect made online gambling illegal there.

Shares in the Partypoker website operator jumped 14%, to 250 pence, after it said it would pay a charge of about $105m to settle the claims.

Other gambling stocks gained on the news. 888 Holdings rose 7.8%.

The settlement was reached with the US attorney's office for the southern district of New York.

Gambling act

In October 2006, President George W Bush signed the Unlawful Internet Gambling Enforcement Act, criminalising the transfer and handling of payments from online gambling.

The move caught the industry off guard, and set in motion sweeping changes which saw Gibraltar-based Partygaming withdraw from the US market, where it collected most of its revenue and profit.

Since then, shares in Partygaming and other gambling stocks have dropped sharply. Partygaming's shares have fallen for the past three years and were down 32% last year.

Partygaming said revenue in the first quarter fell to $100.1m, from $129m in the same three-month period last year.

Poker revenue declined to $53.6m, from $80.7m

[FCP Bob]

And here is Party's Press Release

http://www.partygaming.com/pg/mediacentre/...alnews/?ref=205

PartyGaming Plc
(the ‘Company’)

Non-Prosecution Agreement Concluded with the US Authorities

Further to previous announcements, the Company announces that it has entered into a Non-Prosecution Agreement with the US Attorney’s Office for the Southern District of New York (the ‘USAO’).

Under the terms of the Non-Prosecution Agreement, the USAO will not prosecute PartyGaming Plc or any of its subsidiaries (collectively, ’PartyGaming’ or the ‘Group’) for providing internet gambling services to customers in the US prior to the enactment of the Unlawful Internet Gambling Enforcement Act (‘UIGEA’) 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.

Summary of key terms of the agreement

• The Company has agreed to pay a total of $105 million, payable as follows:

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

The Company has entered into a Statement of Facts regarding its activities prior to 13 October 2006. Key elements of the agreement and factual background are as follows:

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.”


Contacts:
PartyGaming Plc +44 (0)207 7337 0100
Peter Reynolds, Group Director of Corporate Affairs
John Shepherd, Director of Corporate Communications

[StrippersNBlow]

I don't see how this is good for online poker in the US at all. By paying the fine aren't they basically admitting guilt to doing something wrong? Doesn't this set a bad precedent for the companies that still do serve US customers, or did the US Justice Dept just bluff PPoker out of 105m?

[aucu]

I don't see how this is good for online poker in the US at all. By paying the fine aren't they basically admitting guilt to doing something wrong? Doesn't this set a bad precedent for the companies that still do serve US customers, or did the US Justice Dept just bluff PPoker out of 105m?

That sounds about right but they are traded on the London Stock Exchange and have to be proactive to protect against possible liabilities.

[wildspoke]

The stock is slow climbing up about 100 pts since December.

I wouldn't be surprised if Party Poker re-enters the market around the time the WSOP main event starts up.

[vbnautilus]

Yeah, I agree with SnB, this is terrible.

Under the terms of the Non-Prosecution Agreement, the USAO will not prosecute PartyGaming Plc or any of its subsidiaries (collectively, ’PartyGaming’ or the ‘Group’) for providing internet gambling services to customers in the US prior to the enactment of the Unlawful Internet Gambling Enforcement Act (‘UIGEA’) on 13 October 2006.

Especially since they are paying for stuff pre-UIGEA they are essentially setting a precedent that the government can fine you for online gambling practices even without the damned UIGEA. They should have fought this extortion.

[Schuler]

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.

This seems to be the most important point. From what I understand, it's violations of laws other than the UIGEA that they're paying for. However, the problem seems to be that they (the law enforcement agencies) didn't care about these apparent violations until after the UIGEA.

Anyway, the tone I get from this release makes it almost seem like they are worried more about money laundering than gambling. That's purely inference, though, so I could be way off base.

[MaxStPolish]

Yeah, I agree with SnB, this is terrible.



Especially since they are paying for stuff pre-UIGEA they are essentially setting a precedent that the government can fine you for online gambling practices even without the damned UIGEA. They should have fought this extortion.

It's a voluntary agreement. There's no prosecution. The only precedent that this would set is for these gaming companies to pay for these BS allegations.

This sets no precedent for future prosecution/litigation. That will be set when one of these companies balks at this 'agreement' and fights the allegations to the end. I think it's better that party didn't fight these right now. I think a company that fights this battle in a year or two or three will have a much stronger footing than party would right now.

Just my thought.

[GeneralGeeWhiz]

cliffnotes: good or bad? it sounds bad.

[nutzbuster]

I don't see how this is good for online poker in the US at all. By paying the fine aren't they basically admitting guilt to doing something wrong?

put me in the this does not initially sound like good news good camp

[vbnautilus]

It's a voluntary agreement. There's no prosecution. The only precedent that this would set is for these gaming companies to pay for these BS allegations.

This sets no precedent for future prosecution/litigation. That will be set when one of these companies balks at this 'agreement' and fights the allegations to the end. I think it's better that party didn't fight these right now. I think a company that fights this battle in a year or two or three will have a much stronger footing than party would right now.

Just my thought.

Yeah I didn't mean precedent in the legal sense. I agree there is no legal precedent, that's why I called it an extortion. It's just a bad sign that a major player can be forced to acquiesce when they probably didn't break any law.

[Whatever]

From 1997 until 13 October 2006, PartyGaming offered internet gaming to players located in the US, including real-money poker and casino gaming.

I wonder if that makes any difference at all?

[Whatever]

UB/AP offers blackjack right?

[Jeepster80125]

I don't see how this is good for online poker in the US at all. By paying the fine aren't they basically admitting guilt to doing something wrong? Doesn't this set a bad precedent for the companies that still do serve US customers, or did the US Justice Dept just bluff PPoker out of 105m?

I think Party agreed to this to ensure that none of it's top brass gets into trouble with the government. Now, they don't have to worry about traveling through the US etc.

The stock is slow climbing up about 100 pts since December.

I wouldn't be surprised if Party Poker re-enters the market around the time the WSOP main event starts up.

Party won't do business in the states as long as the UIGEA is in effect imo.

[FCP Bob]

I think Party agreed to this to ensure that none of it's top brass gets into trouble with the government. Now, they don't have to worry about traveling through the US etc.


Party won't do business in the states as long as the UIGEA is in effect imo.

The UIEGA being repealed or not enforced won't factor into any decisions by a company like Party Gaming to re-enter the US market. The fine they paid was for their pre-UIEGA activities so unless there is specific new legislation allowing online gaming they won't be coming back.

[Balloon guy]

Nothing like whetting the appetite of the government with a $hundred million


You people that want the government to turn their eyes to online poker may soon get your wish

[Jeepster80125]

The UIEGA being repealed or not enforced won't factor into any decisions by a company like Party Gaming to re-enter the US market. The fine they paid was for their pre-UIEGA activities so unless there is specific new legislation allowing online gaming they won't be coming back.

Agreed.