April 7, 2009 - Ontario, Canada
The online casino gambling industry could be on the verge of a huge consolidation with PartyGaming agreeing to pay out a $105 million dollar penalty.
PartyGaming PLC said Tuesday it has reached a non-prosecution agreement with U.S. authorities over its defunct operations there, with the online gambling group agreeing to pay a $105 million fee.
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. 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.
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.” PartyGaming has also “agreed to maintain, with respect to its operations, a restriction preventing internet gambling services from being provided to customers in the U.S. in violation of the prevailing law of the U.S. or any jurisdiction with the U.S.” Chief Executive Jim Ryan said 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 interests of shareholders.”
“We are now well-placed to seize organic as well as strategic opportunities that previously were beyond our reach,” he said. PartyGaming’s successful resolution with U.S. authorities was seen as turning point for the online gambling industry, with many analysts forecasting industry consolidation.
So even on a ‘bad’ market day with the DOW down – companies like CryptoLogic Ltd is up over 7% on this exciting news. CryptoLogic’s share price has been beaten down over the past 12 months but now there seems to be a large pot of (buyout) gold at the end of the rainbow. After rumored to have turned down attractive offers last year it is expected that CrytopLogic would jump at a good offer from PartyGaming.
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