PartyGaming And US Reach Historic Online Gambling Resolution
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The ongoing drama that was PartyGaming Plc. versus the US has finally come to an end. PartyGaming has announced early this morning that an agreement has been reached between themselves and the US.
Speculation had been building as to what the final agreement would amount to. In the end, PartyGaming agreed to pay $105 million to the US in exchange for no prosecution for their conducting online gambling business in the country.
“The resolution of our position with the US authorities marks an important day for PartyGaming,” said the company’s Chief Executive Officer, Jim Ryan, “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 interest of our shareholders.”
In the Statement of Facts that accompanied the agreement, PartyGaming admitted that they had been taking bets from players in the US. They also agreed to stay out of the US online gambling market in light of the current laws. In exchange, the US agreed to no further prosecution of PartyGaming.
In 2006, US lawmakers voted in favor of the Unlawful Internet Gambling Enforcement Act. That law was supposed to be the end-all of Internet gambling in the country. What has happened, however, is that the law has been accused of being vague and millions of residents in the US are still gambling online.
US Representative Barney Frank is expected to introduce legislation that would overturn the UIGEA, but in light of the economic conditions, the Bill has taken a back seat for Frank who is the House Finance Committee Chairman.
While PartyGaming and many other foreign companies have pulled out of the market after the UIGEA, others are weathering the storm and still servicing the demand of millions of Americans.
The agreement between the US and PartyGaming has been rumored to be close for several months. Many people following the story expected that the negotiations would have netted more money for the US after one of PartyGaming’s founders, Anurag Dikshit, plead guilty in US court to offering illegal gambling services and agreed to pay $300 million.
The deal announced this morning could have major implications for PartyGaming in the immediate and distant future. Shares in the company are expected to spike after this news reaches investors.
The bigger picture, however, indicates that if, and when, US online gambling laws are changed, PartyGaming would be a candidate to receive licensing and re-enter the US market.
The financial terms of the agreement may not be met until 2012. PartyGaming will have the option of paying the $105 million in eight semi-annual installments, but the money is the smallest of details. As for the future of Internet gambling in the US, and PartyGaming’s role in it, Ryan offered a hint of what may be to come.
“We’re hopeful that, in the fullness of time, the new (Obama) administration will take steps to regulate it (online gambling).”