News

Wednesday, 08 April 2009 07:02

PartyGaming PLC, the giant Internet poker and online casino operator, has today reached an agreement with United States authorities that lets them off the hook over possible prosecution for its now defunct online gambling operations there. The British based Internet gambling company has agreed the payment of a landmark non-prosecution fine of $105 million.

This agreement means that PartyGaming and its subsidiaries will not be prosecuted by the United States Attorney's Officer for New York’s Southern District for the provision of online gambling services to U.S. customers prior to the October 2006 ban. As part of the terms relating to the deal, PartyGaming agreed to admit in their “statement of facts” that it targeted United States citizens which resulted in financial transactions being processed that were in fact contrary to certain United States laws.

The payment of the $105 million settlement will be made over eight instalments extending over a period up until 30th September 2012 and will be drawn from PartyGaming’s existing financial resources.

The apparent leniency of this deal will bring relief to investors although it is likely to foster speculation in Partygaming and its rivals Sportingbet and 888.com, who have also been in separate negotiations, becoming targets for takeover bids.

Jim Ryan, Chief Executive of Partygaming said that the process had been long and complex but the amicable solution that has been reached with the USAO make perfect commercial sense for their business as well as being in the shareholders’ best interests.

This landmark deal is seen as the industry’s turning point by many analysts who now forecast industry consolidation. This deal could actually set the wheels in motion for a return to the highly lucrative U.S. gaming market once the laws have been suitably amended there.

This agreement has overshadowed a revenue fall of 22% to $100.1 million in its first quarter against $128.9 million in the same period in 2008. This is attributed mainly to the strengthening of the U.S. dollar against both the pound and the euro, although other factors such as pressure from competition in online poker, ironically from U.S. based poker sites along with the general slowdown in consumer spending.

PartyGaming was once the world’s largest online poker company. It was also an active member of the FTSE 100, although its shares collapsed following the U.S. ban on online gambling in 2006. Yesterday, PartyGaming shares traded on the London stock exchange closed at 219p, setting the group’s value at £886.7 million.