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PartyPoker Bets $105 Million on Return to U.S.13 May 2009
A little over a year later, the conservative Republican leader of the U.S. Senate, Bill Frist, rammed the Unlawful Internet Gambling Enforcement Act through Congress. The bill was approved by both Houses in the wee hours of Saturday, Sept. 30, 2006. Before that Monday, PartyGaming announced that it would immediately stop taking players from the United States, not even waiting until President George W. Bush signed the UIGEA into law on October 13, 2006. All other publicly traded online gaming companies followed PartyGaming’s lead. Cutting off your largest market is obviously not good for business. Mr. Frist’s UIGEA acted like a terrorist attack on the London Stock Market, wiping out $8 billion in equity of the online gaming operators in one day. Some large, privately owned online poker rooms decided to continue taking bets from Americans. Despite threats from the federal Department of Justice (“DoJ”), these operators, including Full Tilt and PokerStars, have made hundreds of millions of dollars. How could they miss? It was like selling cars (before the current recession/depression), and finding General Motors and Toyota had decided to abandon the U.S. market. Now PartyGaming wants back in. And it wouldn’t mind if Full Tilt, PokerStars and the others were forced out. PartyGaming feels it made the right choice in leaving the American market. If Internet poker is made completely legal, it believes that only those companies that did not take online bets after the passage of the UIGEA will be able to operate here. But there was one additional problem. The DoJ declared that even those companies that stopped taking bets from the United States were still criminally liable for the years when they did have American online poker players. The DoJ may be wrong. After all, no one has ever been convicted for merely running an online poker room. Still, PartyGaming needed to get rid of this threat. And it just agreed to pay $105 million to have the DoJ drop all charges. Legally, PartyGaming is only settling with the U.S. federal government. But the political reality is that the states probably will not now pursue independent prosecutions. So, PartyGaming has bought legitimacy, making it easier to raise money for acquisitions and to create joint ventures with both online and land-based gaming operators in the U.S. and abroad. Internet gambling, particularly poker, may be about to expand in the U.S. This year, there have been court cases in Colorado, Pennsylvania and South Carolina, finding that poker is a game of skill. California may legalize intra-state poker. Most importantly, Representative Barney Frank is pushing for major changes in the UIGEA. Advertising of money sites, or dot-coms, is still restricted. But the growing respectability and optimism means we will see more money spent on dot-nets, or free sites with the same names, like "PartyPoker.net." The most successful Internet gambling companies are primarily the ones with the best marketing, so PartyPoker and its competitors have to get their name recognition back in the U.S. We will not see a return to the glory days of PartyPoker in every state. But other Internet operators, like 888.com, now have to think about settling also, to get back into the market that is about to open. Copyright 2009. All rights reserved worldwide. Gambling and the Law® is a registered trademark of Professor I. Nelson Rose.
PartyPoker Bets $105 Million on Return to U.S.
is republished from iGamingNews.com.
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