Barrons: Only the house wins
 

In this weekends Barrons:

- President Bush is expected to sign that into law in early November.

-U.S. officials are also exploring whether international tax treaties might allow regulators to go after companies and executives on their home turfs for U.S. tax evasion.

Under the Internal Revenue Code, there's a 2% excise tax imposed on all wagers not authorized by state law. Such an imposition on PartyGaming last year on the U.S. portion of its $48 billion in wagering would come to about $800 million before penalties and interest. That alone would've nearly wiped out its net revenues of $977.7 million for the year.

Representative Leach, for one, thinks that the industry's prospects have been blighted by his legislation. "This may well be the death knell of offshore Internet gambling," he tells Barron's. "Only time will tell, however."

There is also a part about Ruth Parasol, Party founder: Life story, cashing out, etc.

---------------------------

MORE TROUBLE COULD LIE ahead for PartyGaming. Gamblers anxious to clear out their accounts could cause a run on the bank. For according to the company's June 30, 2006, balance sheet, PartyGaming owes its clients $192.6 million in liabilities and prize pools, while having only $132.9 million in cash and cash equivalents to meet that obligation. And those cash holdings are likely to have fallen sharply, because of $130.5 million of cash spent on an acquisition in August. Meanwhile, The Financial Times reported the cancellation of a $500 million bank credit line that the company had made some use of. PartyGaming recently cancelled a $115 million special dividend to shore up its cash.

The problem all this poses for gamblers is that, unlike the brokerage industry, customer accounts aren't segregated and insured. Your money and the house's money tend to be one.

Several phone inquiries by Barron's to PartyGaming on its current cash situation went unanswered

Of course, the company could make good on its obligation with its retained earnings and shareholders equity, if there were any. But unfortunately the company has a negative tangible net worth of minus $53 million. And after what happened in Washington, one can bet that its servers and other physical assets are no longer worth the $58.3 million shown on the balance sheet. Nor are its goodwill and other intangible assets likely worth anywhere near their $144.4 million balance-sheet value. Not when the business has just gone up in smoke.

PartyGaming offers a sad tableau. Investors have already lost a ton. Its players may have their money frozen, or never get all of it back. There are no winners in this sordid tale, except Parasol and the other insiders. You don't beat the house.

Re: Barrons: Only the house wins
 

Do you have a link to this?

Re: Barrons: Only the house wins
 

THis really makes no sense. How could they have ever offerred a $115 million divident in the first place if that represents all the cash they have?

Re: Barrons: Only the house wins
 

This seems ridiculously anti gaming. Does anyone have confirmation of this:

[ QUOTE ]
The Financial Times reported the cancellation of a $500 million bank credit line that the company had made some use of.

[/ QUOTE ]

I can't find it anywhere

Re: Barrons: Only the house wins
 

I heard about that yesterday. There was a clause canceling their line of credit in the case of gambling becoming illegal in America. But that credit line was only for acquisitions anyway, and they in fact had never touched it.

Re: Barrons: Only the house wins
 

OK, that's old news. It refers in their clause in their contract that the loan could be called in if gambling became illegal in the US. It's not a sudden or unexpected cancellation, nor had they dipped into this fund beyond about 10mil or so.

Re: Barrons: Only the house wins
 

I just decided to cash out right now..No sense in
waiting until the last minute with the small probability
that this is true.

Re: Barrons: Only the house wins
 

[ QUOTE ]
Do you have a link to this?

[/ QUOTE ]

Barron's is subscription based:

www.barrons.com

They are owned by Wall Street Journal

Re: Barrons: Only the house wins
 

I'll be picking up a Barron's this weekend. Thanks for the info.

Regarding the 2% excise tax and the risk to Party, anyone now think that the WTO findings are irrelevant? We're talking about the IRS attempting to wipe out PartyGaming's net revenue for the entire year. Also for those that believe the U.S. will be lenient with Party Gaming execs because they barred Americans want to rethink that one?

Re: Barrons: Only the house wins
 

America - "What you are doing is immoral and is destroying our country and children. We won't stand for it, we want nothing to do with you or your business, so stay out. Uh, can we have 2 percent of your revenue now?"