Why Partygaming, Sportingbet & 888 left?

[Harmonica]

Hi

I'm have trouble finding an article I read that spelled out the reasons why the companies listed on the UK stock market reacted the way they did, could someone maybe quickly explain it to me or provide me with a link. Because I am trying to work it out in my head right now, and it doesn't make any sense, I'm I right in assuming the bill only goes after the banks so therefore it shouldn't affect us as poker players or the actual poker sites, because I thought that all the sites only dealt with companies such as Neteller, who have said that its basically business as usual.

Thanks

[AndyH69]

Because (I believe) the legislation has made it illegal for companies to take bets from US citizens.

888 mentioned it in their conference call with investors, and also highlighted it in one of their press releases:

"These provisions state that, from the date the legislation becomes effective, the receipt of funds by electronic funds transfer and other prescribed methods in connection with internet gaming that is illegal under U.S. state or federal law will constitute a federal offence by the relevant operator."

Press release taken from here: http://miranda.hemscott.com/servlet/HsPu...nsform=newsitem

While others (such as Poker Stars) are happy to take the risk, publicly-listed companies cannot afford to do so. They would find it more or less impossible to get people (and most importantly institutions) to invest in their company if they were breaking the law.

[Quasar]

i dont understand why a european based company listed on the UK stock market is subject to US law.

it is illegal to own firearms in the UK so does that mean any american who owns a firearm in the US can be arrested as soon as he steps on UK soil even though he left it at home??

[Jestocost]

I'm afraid there's not going to be a simple and easy answer to any of this. Companies make complex business decisions based on potentially subjective criteria all of the time; some are more prone to a conservative approach others are more willing to take risks. Just as some poker players are more likely to gambool and others are weak-tight, so it is with companies. You can find successes in either camp.

In many cases, attorneys won't give you a black and white answer on an issue. The Internet gambling legislation is one that has been open to interpretation and there are many gray areas. One company when presented with a range of options and the accompanying risks will opt for a risk averse position and lay down. Another company may elect to take the risks.

In addition, the Internet gambling law can have an impact above and beyond what it explicitly bans. Online poker sites can fully believe that they are operating legally and are exempt from the U.S. law, but if their banks and other service providers believe otherwise then it may be a moot point. It can be argued that the publicly traded UK/Gibraltar poker sites have by virtue of their legal structure of choice made themselves more prone to the effects of these kinds of influences.

In the end, reasonable people presented with the same set of facts may come to different conclusions. Party, Sportingbet, 888, et al have determined that their best interests lie in complying with the U.S. law despite potentially valid legal opinions suggesting that they don't need to. Full Tilt, PokerStars, UltimateBet and others have taken the same basic inputs and elected to place their faith in those viewpoints, in the face of the risk that they may be proven to be wrong or that circumstances may not play out in their favor. Perhaps one side will be proven to have made the correct choice or maybe something else entirely will be the key to long term survival and success.

Like poker, business frequently is a game of incomplete information. It doesn't lend itself to completely objective analysis. Sometimes you gamble against all odds and come out ahead, sometimes you play it safe and get rivered by a two outer. Time will tell what happens in the Internet gambling world.

[betgo]

They are weak/tight.

[Phil153]

Because the legislation has made it illegal for companies to take bets from US citizens or assist in the transfer of funds in direct connection with illegal betting or wagering (defined by state laws).

Even TruePoker CEO, who made the strongest statements on this board about online poker operators not being affect by this law, banned certain states from playing at his site when the bill was signed, to the contrary of all his strong assertions that this bill absolutely did not not apply to operators.

[MagCFO]

It has to do with legal liability. Public companies have to be very careful with respect to shareholder lawsuits.

If you are operating in an illegal market and something happens that makes the stock tank (board member picked up while in the US, etc.), you will get you butt sued big time.

That's a risk these companies can't take. Smart people like Calvin Arye at Bodog never went public for this exact reason.

[Richas]

Before this act the companies could claim that they believed what they were doing was legal under the Wire Act etc even though the US gov thought not. Now there is no ambiguity it would be illegal to accept cash from US players.

This wiggle room allowed them to list in London so long as they detailed the risks. Now there is no doubt that taking US cash is illegal they can't carry on operating in the US as a listed company.

The rules are clear that you cannot be listed if you are a criminal enterprise. You can't list Mafia.inc in the UK even if Mafia.inc promise not to break the law in the UK. This applies to all sorts of companies so say a tobacco company is listed they can sell cigarettes that kill to anyone who can buy them legally but you couldn't list if your business plan was to sell cigarettes to tobacco smugglers. Of course all tobacco companies sell low duty cigarettes in one country knowing they will be smuggled - this is just OK so long as they try to stop their guys conspiring with the smugglers.It's not OK to have ciggie smugglers incorporated listed.

It's this sort of grey area that sites listed under. With the new act there is no grey. For the shareholders it is essential they can buy/sell their shares and they own the business so no US players. They could go private and relaunch or they could do what Sportingbet did and sell the US business to a couple of the managers but a listed company cannot be based on criminal activity.

[Quasar]

its probably my lack of knowledge of law in both the UK & US that is preventing me from getting my head round this.

I dont understand how party and the other listed companies can be criminal enterprises since they have no presence in the US and presumably have not broken any laws in Gibraltar where they are based or anywhere else whose laws they have been subject to.

Just because the US decides something is illegal doesnt make it illegal everywhere else surely. They can legislate and prevent US banks etc from handling gambling transactions but surely they have no power whatsoever to legislate against companies not based on US territory.

Sorry if i seem retarded here but i just dont get it.

[Phil153]

It's pretty simple. They're taking bets from US customers. That means they're breaking US laws. If they were taking bets from Swedish customers, they wouldn't be breaking US laws.

Think of it this way. If I (living in Australia) open an online bank account in the US and commit fraud with that account, I have broken the laws of the US. That means that if I ever set foot in the country, or if the American government could be bothered extraditing, I am able to be arrested under US law, since I have broken the law by transacting with a US bank in a fraudulent manner.