My Opinion About The Signifigance of Party's Decision

David Sklansky · #1 10-05-2006, 10:37 AM

Keeping in mind that the following is based on only a fuzzy understanding of the details which usually stops me from piping in.

There seems to be four reasons mentioned why the internet bill should not be a major cause for concern (difficulty in enforcement, not applicable to poker sites, WTO, eventual carving out of poker from casino gambling). Plus there is the 270 day window.

Because of the above and maybe other reasons, most sites are doing business as usual.

Some here though point to Party's pulling out as evidence that the reasons for optimism are not as strong as we think. Else why would they do it? Especially before the 270 days.

My guess is that it is not really for legal reasons nor due to the fact that they don't want to go to jail. My guess is that as a British public company that feel it is important to maintain, shall we say, their DIGNITY. Perhaps not the perfect word but close enough.

The fact that they can get away with continuing to serve Americans for 270 days or maybe indefinitely doesn't matter. The fact that the WTO may quickly change things or that poker sites may be ruled an exception doesn't matter.
What I believe matters to them is the fact that flawed or not, the bills passage seems to say that most US Congressman don't want them offfering their services to the US. Not only don't they want it, they THINK they have expressed that in their vote. And for a British public company that is good enough. At least for now.

If my take is right that is of course good news for poker players. Because it means that Party's caving doesn't necessarily show that the other sites are showing merely wishful thinking by hanging around. The dignity issue doesn't apply to them. If the law is unworkable, immoral or shouldn't apply to poker those are all good reasons for most sites to carry on.

dave1mo · #2 10-05-2006, 10:40 AM

I sure hope you're right...

JSH06 · #3 10-05-2006, 10:41 AM

Nice post David. I, as well as many others on this forumn, agree with a lot of the stuff you sad.

Michael C. · #4 10-05-2006, 10:42 AM

Nobody gives up 80% of their business to save their "dignity." Party's interpretation could be wrong, but for whatever reason, they pulled out because they believed it was in their best interest. There are also smaller sites who are pulling out who could go broke. So they clearly believe they are risking something. Other sites disagree, and I hope the ones that stay are right.

gila · #5 10-05-2006, 10:43 AM

Mr. Sklansky, it is really nice to see you participating in this forum.

Beachman42 · #6 10-05-2006, 10:45 AM

Your reasoning is plausible, but it sure would be nice if Party would elaborate. My concern is if Party pulls the US plug for even a short duration, it wil have a detrimental impact on the novice & new players; possibly discouraging them to the point of giving up. Also, the loss of Party's high level of advertising will eventually slow the sign-up of new players. Guess we'll just have to wait and see.

freewheeler · #7 10-05-2006, 10:46 AM

That would be an awful lot of $$$ for the sake of dignity... Even our fine upstanding British brothers like money. A lot.

My guess, FWIW, is that PP will reverse course. Greed wins over dignity, even for the British.

jalexand42 · #8 10-05-2006, 10:54 AM

Just my personal opinion as a business owner, but Party and some of the other majors, particularly the publicly traded majors, are more likely to look to work within the scope of what the US wants.

It is my personal opinion that this particular law is a short term issue, totally due to political posturing that ultimately won't matter anyway (I don't think Frist has a chance at the presidency). In the long run, the power of the lobbies and the almighty dollar will ultimately lead to legalized & regulated IGaming, very likely controlled in a large part by the major B&M players.

In the short term, Party & the other's decisions look stupid, but if there is a real chance at legalized/regulated gaming a few years down the road, Party would be VERY short sighted to take an approach to the US gov't that would prevent them from _EVER_ getting LICENSED access to a regulated market. In the LONG run of 30+ years, Party's decision could be extremely wise.

I don't believe Party or any other company would have cut off 80% of their revenue for 'fluff' reasons, they think this is in their best long term interest.

Dunkman · #9 10-05-2006, 10:56 AM

I agree David. It appeared to me that their move was motivated by a desire to try and preserve as much of their stock value as they could. Financial markets tend to respond more negatively to uncertainty than they do to bad news. At least that's been my experience. So, they were probably figuring that they could retain the most shareholder value by immediately pulling out of U.S. markets. I don't think their move had anything to do with whether or not they thought it would be possible to still operate in the U.S. under the law.

faustusmedea · #10 10-05-2006, 10:56 AM

David,

I would replace Dignity with Propriety as the word you seek.

That said, I have to disagree. I've been around long enough to know that when enormous sums of money are involved, dignity or propriety are usually the last concern.

Its possible they are seeking the appearance of propriety as a cynical precurser to coming back to the market down the road (wanting to appear to respect the laws believing change will come later. A company indicted when igaming is illegal might have a hard time re-entering when it becomes legal).

Losing significant operational revenues would only happen if the company felt specifically required to do so or they were managerially incompetent. This doesn't even take into consideration the enormous losses suffered by investors.