PartyGaming Betting on a Return To The Lucrative US Market
By: Ainsley Brown
The online casino operator famous for its online poker – PartyPoker – ended its protracted battle with US authorities and agreed to pay a $105 million fine.
In 2006 US law makers made internet gambling illegal – something about crossing state lines and international boundaries – cutting deep into the earnings of PartyGaming and other online gambling sites. Really US law makers, though I don’t think they would admit it, were largely bowing to the Las Vegas and Atlantic City lobbies, whom instead of join the game sought to end it as it was seen as a threat to their existing operations. Interesting, I thought competition was the American way, I guess not always.
While PartyGaming officially withdrew its operations from the US at that the time it must be remembered the medium through which it offers its services – the internet – has limited territorial limitations. In effect it was breaking US law. However, up until these latest developments, vigorously denied it was going any such thing. PartyGaming insisted that since poker and other casino games where in fact games of skill and not games of chance the US law was not breached.
Oh come on, give me a break.
This clearly had no sway with US authorities who continued to pursue PartyGaming. In fact they, before brokering the deal, were seeking the repatriation of all profits make in the US and where even pushing for jail sentences for senior executives and shareholder.
But alas tis not to be.
Along with the $105 million fine – to be paid over eight years on a biannual basis – PartyGaming for the first time in a statement of facts had to admit that it did indeed break US law. This landmark settlement not only helps clear the way for PartyGaming’s US return – finger crossed – but also establishes precedence for other similar deal to be brokered between US authorities and other online gambling sites.
I see a couple issues here from the laymens perspective. I agree with the notion that the established Gaming Lobbies of Vegas etc are influencing law makers to limit competition for Gaming dollars in the US market. However, I see a business model flaw with PartyGaming, why would the present their product as a game of skill versus gambling and assume it would protect them from the exisiting legislation? This seems poor risk management. Second their competition for the most part recgonizes this risk and operates off-shore, and gain multiple business, tax, and legal benifits for doing so. I don’t see much of a legal issue, because it is clear they were in violation, this is bad business management. The executives and the company are lucky to have escaped so lightly.