PartyGaming Pays Out

PartyGaming, an online gambling website, has reached an agreement with the United States government to pay out $1 billion over illegal online gambling that occurred before the 2006 Unlawful Gambling Internet Enforcement Act was enacted.  This payout by the website and its parent company will supposedly forgive any of the activity that was deemed illegal.  Interestingly enough, this settlement is coming on the heels of the already adjudicated case between the United States and Antigua in which the United States is being required to pay $21 million in illegal restriction of trade damages.

PartyGaming PLC has still seen their shares increase by 10% through this ordeal and the unexpected settlement they made with the United States.  Listed on the London stock exchange for share trading, other online casinos have also seen their shares increase, although which sites have been successful have not been disclosed.  Trading of shares for online gaming companies is illegal in the United States.

Many people feel that the settlement is out of proportion, but the management of PartyGaming is very happy with the result.  By paying out the $1 billion, executives and employees of the company are able to return to the United States and travel freely without the fear of being arrested in order for the case to go to prosecution.  This in itself was seen as a form of persecution by the United States government and the situation caused the World Trade Organization to get involved.

According to online gambling experts, Antigua has been damaged by the blocking of citizens from the United States from the ability to gamble online.  Antigua’s main export and source of revenue is the online casinos and poker rooms in which they license and experts are viewing the Unlawful Gambling Internet Enforcement Act as ludicrous legislation since land based casinos in the United States are engaging in the same activities that are being offered online. The US government profits handsomely from the $30 billion or so spent annually in American land casinos, and yet refuses to accept the online version.

The financial damages to Antigua are actually somewhere closer to $3.4 billion dollars.  Currently, the World Trade Organization is following up on questions sent to the United States government about online gambling by countries in the European Union who are claiming that the ban violates many of the free world trade agreements.  The PartyGaming settlement may find itself quickly becoming part of the investigation if the World Trade Organization decides to levy any more penalties against the United States.

However, should the US decide to overturn its gambling laws in the future and re-allow online poker and casino games, PartyGaming will be well placed to do business with the Americans.