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Confidence Gains After Settlement

Party Gaming, an international online casino gambling brand, has announced a settlement deal with the US Department of Justice that has not only surprised most of the industry, but it has also restored faith in the company. Shares in the company have gained value since the legal settlement was announced – shareholders were cautious and a bit afraid to invest money in Party Gaming in case the company was facing severe fines in the US for pre-UGIEA activity. The UIGEA is the controversial piece of US legislation that effectively forced foreign online casinos out of the US internet betting and gambling market. Although Party Gaming immediately left the US market when the UIGEA was enacted, the DoJ, questionably, pursued legal action against Party Gaming for operating in the market prior to the UIGEA.

Many analysts in the online casino industry assumed that Party Gaming would continue to fight the US government on the charges for some time – this is partly why the share remained a low value over the past couple of years. With the announcement that Party Gaming agreed to pay $105 million to the US government over the course of three years shares have now risen a full fifth of their value. This is quite remarkable. Last month a Party Gaming co-founder agreed to pay three times that sum to the US Attorney General and the issue is still not entirely settled.

In this case though, the online casino gambling group is safe from any further action from the US government as a part of the settlement agreement. The $105 million fine is just one part of a “Non-Prosecution Agreement” made between Party Gaming and the US officials. This means that Party Gaming is not really admitting any real wrong, just agreeing to pay the fine in an effort to avoid a long and drawn-out trial that would only decrease the company’s value across time. This method has restored confidence and allows the online gambling group to now engage in new agreements and acquisitions with other companies in the industry.