PartyGaming Case Settled; Fee Will Be $105 Million
April 7, 2009 (CAP Newswire) – After a long period of negotiations and legal maneuvering, PartyGaming has reached a deal with the U.S. Department of Justice to settle the years-long prosecution against the U.K.-listed gambling company, the Wall Street Journal reports today.
The deal is being called a "non-prosecution agreement," meaning that the company will pay a sizable fee rather than face any criminal charges. The agreed-upon penalty will take the form of a $105 million fee, reached after nearly two years of discussion and negotiation.
The case has been a controversial one, given the fact that it is essentially prosecuting a non-American company for providing a service with a legality that is difficult to define in black-and-white terms.
"After almost two years of discussions, the U.S. Attorney's Officer for the Southern District of New York has agreed not to prosecute PartyGaming or any of its subsidiaries for providing internet gambling services to customers in the U.S. prior to the U.S. government banning the online gambling industry in October, 2006,” writes Lilly Vitorovich in the article.
"In turn, U.K.-listed PartyGaming has accepted a 'statement of facts' about its business activities prior to the ban, and will pay $105 million in eight installments over a period ending Sept. 30, 2012, from its existing financial resources. The sum is broadly in line with market expectations.
"Under the statement of facts, PartyGaming admits that it offered internet gaming to players in the U.S. from 1997 to Oct. 13, 2006, which was 'contrary to certain U.S. laws.'"
Under the terms of this agreement, PartyGaming also agrees to continue to avoid the U.S. market in the future (at least, until current laws change).
PartyGaming's CEO, Jim Ryan, chose to see the resolution of the years-long case as a positive note, giving his company freedom to pursue new goals. The company will now focus on merger and acquisition activity, according to the article, which went on to predict that the closure of this case represents a turning point for the online gaming industry in general, and may signal a period of market and corporate consolidation.
"We've received a favorable indication from the parties that we'd gone to that once this matter was resolved that we could have access to not only the equity markets, but to debt markets," states Ryan in the article.
Illustrating the positive reaction to the announcement, PartyGaming, Sportingbet, and 888 shares were all up significantly today.
To read Lilly Vitorovich’s original article in the Wall Street Journal, please click here.