PartyGaming Pays the Price for Online Gambling

Published Thursday, April 09, 2009 -

PartyGaming is off the hook for now in the USA but at a price. After threats of prosecution Lev L. Dassin, Acting United States Attorney for the Southern District of New York, stated in a press release recently that an agreement had been reached with PartyGaming an online gambling company based in Gibraltar. A fine of $105 million US was levied in return for agreeing to not proceed to prosecute the offshore company for doing business with customers from the USA.

This is money from a foreign company that engages in an activity that is perfectly legal in the jurisdiction in which it is based, and may have been legal at the time the firm did business with Americans. The publicly traded company on the London Stock Exchange will be allowed to pay the fine over a period of three years.

The government of the US maintains that, prior to the passage of the 2006 law, the federal Wire Act outlawed online gaming, but that interpretation of an old law was never universally accepted. In fact, the United States Court of Appeals for the Fifth Circuit, said "the Wire Act does not prohibit non-sports internet gambling." The Unlawful Internet Gambling Enforcement Act of 2006 was passed to conclude the arguments.

PartyGaming could probably ignore the prosecution threats from Mr.Dassin and the United States Government if it chooses to do so, just as U.S. publishers pay little attention to foreign censors. It is mere speculation that the PartyGaming executives are trying to make amends with the US authorities in the vain hope that the restrictions in the states will be lifted and the company will once again be able to do business legally within the USA.

When the prohibition in the US hit the company in 2006 as much as 88% of PartyGaming's online poker customers were Americans. The action will definitely create reasons for consolidation in the online gaming market. It is expected that Sportingbet will reach some sort of settlement with the US authorities soon. This fine comes in the wake of allegations from the European Commission that says the USA is in breach of World Trade Organization rules that state the US prohibition on online gambling violates the agreements for free trade.

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