Sensationalist Party Gaming Headline of the Week

[MiltonFriedman]

My opening nominee is this gem, gleaned from ATEOnline:

Net Closing In For PartyGaming & 888? - 13/08/07

PartyGaming and 888.com could be hit by a £500m bill following the US Department of Justice's internet betting crackdown.

Sources in the US are claiming that The Department of Justice could try and claw back profits made by the two companies in America - $900m (£445m) in the case of PartyGaming and $120m (£59.5m) for 888.

The returns would severly hamper the companies' financial viability. "

.... 'Sources in the US' .... do they mean guys who are shorting Party shares on the AIM ?

If, on the other hand, this $500MM or so buys online poker generally a pass under the UIGEA going forward, it is money well spent. IF there is a kernal of truth to the report, then a deal likely is in the works along those lines for the payees.

[Skallagrim]

And to think a while back I actually mentioned your name and gaboonvipers in the same post /images/graemlins/wink.gif . I take it back completely now, Milton, this is the most optimistic spin on a poker story I have seen lately. I, however, just cant believe that this administration would ever do anything that a) makes sense and b) is favorable to poker.

Skallagrim

[MiltonFriedman]

You need to remember something really odd about the US Atty in New York at the press conference announcing Neteller prosecution. Namely, he explained why "good" companies, like Paypal/Ebay were not prosecuted because they disgorged profits.

The danger is that Party will throw US poker players under the bus to get off for $900 million. The hope is that they will instead get a "no violation" deal, not just a "no prosecution" deal. (Whether they also throw in the "uncoded transactions" angle would also be interesting.)

The US Atty in the SDNY is not the same guy as the US Atty in Utah or in Missouri.

A possible Party deal ??? (Caution, completely speculative comment to follow) The best possible deal would be, Party pays for a pass on uncoded transaction prosecution, gets a gratis pass for its Poker past under the Wire Act.

Keep in mind you are looking at over $1 Billion versus a prosecution for what ??? Party should improve upon the standard deal and get it sweetened enough to re-enter the US market.

[JPFisher55]

I read the article and it seemed to read that these 2 companies were willing to pay a large fine for violating unspecified US laws without being prosecuted. I don't believe the article. Paying these kind of fines without any prosecution would be violating shareholder interest even in the Isle of Man or Gilbralter.
Nothing was mentioned that the payments were fees to enter the US market.

[MiltonFriedman]

That there have been settlement discussions ongoing has been widely reported.

Consider the menu in the DOJ cafeteria in Lower Manhattan:

Column A = Wire Act

Column B = Possible prosecutions other than Wire Act would include processing uncoded credit card transactions.

Today's special offer:

Pay for one free pass from Column B, (credit cards), also get one from Column A, a Wire Act "poker only = no violation" Letter.

Result, past is clear and Party can re-enter the US market again.

Result = Increased Shareholder value >>> payment amount.

I do not think there is a shareholder issue with that result.

(Legal Disclaimer, I have no Party shares or options, nor know of anyone who does.)

[JPFisher55]

If payment of money could buy entry into US market, then Party would be smart to pay. I didn't read that proposal in the article. Of course, if Party Poker is permitted entry into US market, the how could DOJ continue to claim that online poker violates the Wire Act.
In addition, had anyone ever heard of a company paying a fine to DOJ for alleged past violations of US law in return for a favorable interpretation of US law by DOJ?

[jonyy6788]

can somebody put this is english plz?

[oldbookguy]

Payment alone is not going to 'buy' them back into the U.S. market.

If they agree to some type of settlement over uncoded or otherwise unreported payouts I would imagine it will include a non-prosecution agreement, like Neteller.

They, like Neteller, are publicly traded companies and these seem to be the target of the DoJ since they have more at stake then private companies.

BTW, if you won big at Party or 888 expect that to be disclosed just like our NT accounts. Remember, these talks started following the NT case where alot of information was given to the U.S. government concerning transactions.

obg

[Grasshopp3r]

There needs to be confirmation from Party on this. Their stock is way down since late April.

[MiltonFriedman]

The potential I see here for a deal has 2 parts:

1. Uncoded Transactions processing + waiver of prosecution in return for lots of money.

2. Comfort letter that poker alone does not violate Wire Act.

Setting the bar high on Part 1 will allow DOJ to collect "back taxes" on poker companies which ran uncoded credit card transactions. Thus, a free pass it is not.

DOJ Clarification on #2 should be free, look at the In Re Mastercard decision by the 5th Circuit; so what is the ethical issue you seem to discern ? It would allow Party to re-enter the market, sell itself to Harrahs or whatever else it has been angling for for the last year or so.

Are deals like this cut ? Uh ... in real life, yes. No one is doing anything unusual under this scenario;

Party to DOJ, you know that credit cards settlement is pretty genrous of you and we would like to take it, BUT we can't afford to do so because we lost our US market.

DOJ to Party, well, we know you are stand-up guys who came to us voluntarily to settle this credit card stuff, but you misunderstand the Wire Act ... It doesn't even apply to online poker, you should have asked us last year.

Party to DOJ : DOH!!!, okay here's your check for $X.

[oldbookguy]

[ QUOTE ]
DOJ to Party, well, we know you are stand-up guys who came to us voluntarily to settle this credit card stuff, but you misunderstand the Wire Act ... It doesn't even apply to online poker, you should have asked us last year.

[/ QUOTE ]

Trouble is, the hard headed DoJ ran by Bush / Gonzales says the courts are wrong, they are right, the Wire Act DOES apply to poker.

Maybe, just maybe they will, as you speculate, recognize the courts rulings though I doubt it.

Why would they now, they have not in the past 6 six years in other cases prefering to get the former go along Rep. congress to simply write a new law, though that option is gone now.

obg

[Legislurker]

Im beginning to think the default plan is to let the issue linger for the rest of the administration, barring Antigua getting full sanctions. I hope they are arguing for things based on growth and the size of the domestic gambling industry. Thats the only external shock I see likely unless the banks score a coup with a rider erasing UIGEA quietly. I think Bush et al think they did enough to appease Dobson's child molesters, and can't be bothered to mind the fallout.
I don't have sources but what responses I have gleaned from pesky emails tell me this has fallen so low on the radar its considered beneath full attention.

[Uglyowl]

I think the Karl Rove resignation is a good thing, he was close to "Focus on the Family" and James Dobson.

[Legislurker]

I think close isn't the word. He used them deftly, but like most "evil geniuses" he probably knows what stooges/tools they are. I honestly think he is setting up for a BIG payday from Romeny to run his campaign. Im thinking 15-25 mill. Chump Change for Mitt. The scorched earth lame duck policies are decided on, and he is getting out with his name somewhat intact, and jumping ship. I don't think Giuliani can afford him, or their egos get along. Two smart people in one White House makes for a crowd, historically speaking.

[JPFisher55]

[ QUOTE ]
The potential I see here for a deal has 2 parts:

1. Uncoded Transactions processing + waiver of prosecution in return for lots of money.

2. Comfort letter that poker alone does not violate Wire Act.

Setting the bar high on Part 1 will allow DOJ to collect "back taxes" on poker companies which ran uncoded credit card transactions. Thus, a free pass it is not.

DOJ Clarification on #2 should be free, look at the In Re Mastercard decision by the 5th Circuit; so what is the ethical issue you seem to discern ? It would allow Party to re-enter the market, sell itself to Harrahs or whatever else it has been angling for for the last year or so.

Are deals like this cut ? Uh ... in real life, yes. No one is doing anything unusual under this scenario;

Party to DOJ, you know that credit cards settlement is pretty genrous of you and we would like to take it, BUT we can't afford to do so because we lost our US market.

DOJ to Party, well, we know you are stand-up guys who came to us voluntarily to settle this credit card stuff, but you misunderstand the Wire Act ... It doesn't even apply to online poker, you should have asked us last year.

Party to DOJ : DOH!!!, okay here's your check for $X.

[/ QUOTE ]

I hope that you are right and this deal occurs. I would not mind Party Poker and Pacific Poker paying for the poker exemption for the rest of the online poker sites that probably did the same things as those 2 companies.
However, my credit cards have never worked at a poker site or ewallet.

[oldbookguy]

I would disagree here, any candidte who wins the GOP nomination and is associated with Rove would be a rallying point for the Dems and many in the GOP. Heck, even Hillary would win against any campaign ran by Rove. That is not to say he may have a far right corner back seat somewhere. Even I, a republican who wants a good moderate, would go to the left to keep him out of the White House.

obg

[yahboohoo]

It's interesting to watch any new news like this get dissected with equal parts fear and optimism.

Half a billion dollars = "free pass?" That's like a marketing definition of "free," as in "buy one non-prosecution agreement for $500 million and get a feel-good letter for 'free.'"

The current administration has zero incentive to resolve the online gaming issue prior to the 2008 election. In the meantime, they have plenty to gain by keeping things as is: scare tactics that lead to hefty payouts without any cases ever going to trial. With billions coming in through fines, why should they see any reason or feel any pressure to change things (e.g., legalize)?

For the next 14 months, they certainly won't worry about any else except getting their man (or woman), their chums and themselves elected.

[oldbookguy]

This no incentive by the current administration is one reason we ALL need to keep writing, especially those of us represented by a GOP member. Let that person know our feelings and let others (friends and family) know as well.

And above all, let them know we DO vote and will be keeping this issue at the top of our agenda when pulling that lever!

obg

[chrisptp]

[ QUOTE ]

Payment alone is not going to 'buy' them back into the U.S. market.


[/ QUOTE ]

No, but it will probably be the price of admission for any site that wants to even be up for consideration for whitelisting by the usfg.