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PartyGaming
founder to pay out $300m, by Roger Blitz - 15th
December 2008
(Credit:
Financial Times)
The biggest shareholder in PartyGaming,
the UK-listed online gambling company, has agreed
to pay US authorities $300m and plead guilty to
a charge relating to illegal web betting in the
most prominent prosecution so far in the US clampdown
on internet gambling.
Anurag
Dikshit, co-founder of the company, retains a
27 per cent stake and is due to appear in the
Southern District Court of New York on Tuesday
to admit to an offence under the Wire Act and
to agree to co-operate with the US Department
of Justice, people close to the situation say.
No
plea bargain has been agreed, and Mr Dikshit,
one of India’s richest businessmen, risks
a jail sentence of two years. He hopes the DoJ
will recommend to Judge Jed Rakoff that, having
gone voluntarily to the DoJ, he should not go
to jail.
Observers
say it is a landmark moment for online gambling.
Mr
Dikshit’s fate and the DoJ recommendation
will be watched by individuals and companies who
have been pursued for taking bets in the US.
They
want to put the liabilities behind them to enable
consolidation and growth.
But
Ruth Parasol and her husband Russ DeLeon, Party
Gaming’s co-founders, who each own 14 per
cent of the company, have shown no sign of any
willingness to settle.
PartyGaming,
which enjoyed a stellar rise as a FTSE 100 company
three years ago and made millions out of online
poker, has been in separate talks with the DoJ
for months, as have other companies – including
888 and Sportingbet.
In
a statement to the stock exchange on Tuesday,
the company said: “The company’s discussions
with the DoJ have made good progress and it is
currently negotiating the final terms of a possible
settlement with the DoJ.
“Whilst
these discussions are at an advanced stage, the
terms of any settlement have not yet been finalised
and there can be no guarantee that an agreement
will be reached between the company and the DoJ.”
Shares
in PartyGaming rose 7½p to 146¼p
in mid-mornng trading. James Hollins, an analyst
at Daniel Stewart, noted that the company’s
statement made clear that its own negotiations
with the US authorities are independent of those
of former directors, “implying, in our opinion,
that the likelihood of a settlement and a fine
‘significantly lower than that reported
to be paid by Dikshit’ are now very high.”
People
close to Ms Parasol and Mr DeLeon say they believe
the new White House administration will have weightier
concerns than online gambling. Many in the industry
believe the US will regulate online gambling and
say Las Vegas gambling operators are lobbying
for regulation of an industry they shunned.
Mr
Dikshit is believed to have found the pressure
too much and is ready to risk jail to draw a line
under the matter. But it is thought unlikely that
he will sell down his shareholding in the company.
Mr Dikshit’s representatives declined to
comment.
He
made £420m when the company floated in 2005
and a further £65.7m when he sold another
batch of shares the following year. He also received
a dividend of $64m that year.
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