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Party Gaming Settles with US Government

8 April, 2009, Peter Bowman, Staff writer


Normally an announcement by a company that it has agreed to pay $105 million to settle outstanding charges laid by the US Government would be considered a bad thing, and have negative impact on its share price.

Not so in the case of online poker giant Party Gaming.  In fact the online poker industry as a whole has hailed the move as a prelude to the US opening the door to the larger listed online gambling operators under a new regulatory framework that may soon replace the Unlawful Internet Gambling Enforcement Act (UIGEA).

Party Gaming grew to be the largest online poker room in the world, largely thanks to a substantial American player base acquired between 1999 and October 2006 when UIGEA was enacted.  At that point, they stopped accepting US customers, however the US justice department contends that laws prior to UIGEA, although not internet specific, still rendered the accepting of US bets illegal.  This position has been challenged by the European Union and the World Trade Organization as a breach of the US's international free trade obligations, buts that's another story altogether.

Experts have also contended that the approach has only served to block large listed operators with still enabling Americans to play with smaller operators happy to continue accepting US players.  "The U.S. government has now succeeded in driving out the reputable publicly-traded Internet gaming operators," argues Joseph M. Kelley, professor of gaming law at the State College at Buffalo.  Joseph M. Kelley has also served as an expert witness for gaming and government interests and is an ardent critic of the government's current approach.

Nevertheless, Party Gaming's settlement, which frees them, and co-creator Anurag Dikshit from the specter of possible prosecution, is seen by the industry as a clearing of the decks opening the way for future expansion.  It is also speculated that some of Party Gaming's motivation for agreeing to the settlement may have been prompted by the opportunity to acquire a icense from any future regulated U.S online gaming market.  Heightened expectation that the US will once again open its doors to the big operators has sent gaming stocks around the world soaring.

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