Gibraltar Gambling Groups Seek To Clarify Position

Party Gaming plc this week announced that it has initiated discussions with the US Department of Justice to clarify its position prior to October 2006, when financial transactions with online gambling companies were made illegal by the passage of the Unlawful Internet Gambling Enforcement Act. At that time, Party Gaming withdrew from the US market immediately.

The Gibraltar-based company told Bloomberg and Reuters news services that it is consequently “voluntarily” responding to a request for information from the U.S. Attorney's Office for the southern district of New York.

Bloomberg reminds readers that online gambling industry executives were arrested in the U.S. in the middle of last year. Last month Betonsports pleaded guilty to U.S. racketeering charges and agreed to cooperate in a case against the company's founder.
In March this year Sportingbet brokered a deal with the state of Louisiana to drop charges of “gambling by computer” against its former chairman.

Analysts speculate that the intention of Party Gaming may be to clean the slate on its American activities prior to the advent of the UIGEA, which would clear the way for business initiatives that may be currently impeded by the legal uncertainty over US operations in the past.

"If Party Gaming can positively resolve this issue, it will be good news for the share price, because anxiety about legal issues has been holding up potential merger and acquisition activity,'' said Julian Easthope, an analyst at UBS AG in London. Shares in Party Gaming have gained 37 percent in the past six months after losing more than half their value on the first trading day following the UIGEA. PartyGaming lost about three-quarters of its revenue when President George W. Bush signed the bill into law last October.

The Reuters news service reports that analysts have suggested that the Ladbrokes plc attempt to buy 888 Holdings plc earlier this year was called off because of concern about US legal risks.

The Party Gaming statement said that discussions with U.S. authorities follow “... uncertainty as to what actions U.S. law enforcement agencies may take against” Internet gaming companies following last year's arrests.

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