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Old 06-18-2005, 12:01 PM
BradleyT BradleyT is offline
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Join Date: Dec 2003
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Default Re: Shorting party poker

http://www.guardian.co.uk/business/s...507504,00.html

London's biggest stock market flotation for years has been overshadowed by advice from Washington that the four dotcom millionaires behind the venture risk arrest and prosecution in the United States.
PartyGaming, operator of a hugely profitable poker website, is expected to be valued at £4.76bn when it floats on the stock market in 11 days' time.

The offering will transform one of its owners, Ruth Parasol, the daughter of a former San Francisco massage parlour tycoon, into one of the most successful female entrepreneurs in history.

While the company's activities are legal in the UK, the US justice department is warning that operators of online gambling enterprises could be prosecuted and, if convicted, jailed for years in America.
Internet gambling companies occupy a legal grey area in the US, with many in the industry insisting that case law shows them to be legitimate, while the justice department insists they are outlawed.

According to the department, online gambling operators such as Ms Parasol, 38, her husband, James Russell DeLeon, 39, and their partners, Indian computing experts Anurag Dikshit and Vikrant Bhargava could face prosecution under three federal statutes: the Interstate Wire Act, the Illegal Gambling Business Act and the Travel Act. These carry penalties of between two and five years' imprisonment for each offence.

The company prospectus, published yesterday, concedes that its activities "are considered to be illegal by the relevant authorities" in the US, but says case law has established that online poker sites are excluded from the legislation controlling gambling. It also says its four founders have travelled in and out of the US with impunity.

Ms Parasol and Mr DeLeon have declined to give interviews, refused to be photographed and are rarely sighted in Gibraltar, where their company is registered and they are said to be living. Mr Dikshit, 33, is also maintaining a low profile, leaving Mr Bhargava, 32, as the public face of PartyGaming.

The company denies that is due to concerns over the legal position in the US, and insists that the company's founders want only to lead normal lives after the flotation.

The justice department's warning is likely to increase anxiety among US investment institutions, some of which are reported to be reconsidering whether to back PartyGaming.

When the company announced a flotation price of between £4.4bn and £5.1bn yesterday, instead of the widely predicted £5.5bn, it rejected claims that the cut was in response to those jitters, insisting that the price tag was a "realistic assessment" of the company's worth.

A senior justice department official told the Guardian: "Any business offering online gambling services that are in the United States or can be accessed in the US are illegal.

"The focus today is on how we can do more about it [online gambling] and how we can charge people. If they are American citizens, it would be a little easier for us. They can face prosecution if they enter the United States."

A successful flotation in London, with the vast injection of capital that would bring, would make little difference in Washington, the official added.

"If they're taking bets in the UK, and it's legal there, that's fine; but if they're taking bets in the United States, that's il legal, and they will be prosecuted."

PartyGaming disputes the justice department's interpretation of the law in the US, and said yesterday that no company offering similar online gambling services had ever been prosecuted there. A spokesman added: "The US does not have legislation specifically regulating online gaming and therefore there is uncertainty as to its legality."
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