Profits threat for net betting firms
Two of Britain's biggest online gaming companies could be hit by a £500m body blow following the US Department of Justice's crackdown on internet betting.
PartyGaming and 888.com have had secret meetings with the Americans that they set up to help 'draw a line in the sand'.
However, US sources claim the department could try to claim back the entire profits made by the two companies in America. This would amount to nearly $900m (£445m) in the case of PartyGaming and $120m for 888.
However, sources close to both companies said neither would be prepared to sign a blank cheque, which could effectively put them out of business overnight.
'It would be a shocking move that would be a betrayal to UK investors,' said one insider. Instead, what has been suggested is that the Americans deal with the companies to reclaim some money and then pursue the founders of both businesses, who have taken large dividends, for the bulk of the cash.
PartyGaming has paid 90% of its US profits in dividends and 70% of that went to the hands of the founding shareholders, who still have large stakes. Last October, when shock antigambling legislation went through, both PartyGaming and 888 withdrew from the US.
But this was not the case with payments processor Neteller, which continued to take US transactions until its founders, Stephen Lawrence and John Lefebvre, were arrested and the company's office in Calgary, Canada, was raided by a team of forensic accountants.
Neteller paid $136m to the US government and returned $94m to American customers, while both men pleaded guilty to criminal conspiracy. PartyGaming and 888 have held separate meetings with the justice department and it is hoped that a conclusion will be reached by the end of the year.
The department is also under pressure to announce successes after last October's bill, which has created a vacuum for unregulated online gaming companies that are targeting US customers more than ever.
'The DoJ has to compromise with these two companies, not to try to annihilate them,' said a source.
Most watched Money videos
- How to invest for income and growth: SAINTS' James Dow
- Fiat pledges to cease grey car production as they launch new EV
- BMW meets Swarovski and releases BMW i7 Crystal Headlights Iconic Glow
- 2025 Aston Martin DBX707: More luxury but comes with a higher price
- Land Rover unveil newest all-electric Range Rover SUV
- 'Now even better': Nissan Qashqai gets a facelift for 2024 version
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- Mercedes has finally unveiled its new electric G-Class
- Mini celebrates the release of brand new all-electric car Mini Aceman
- Blue Whale fund manager on the best of the Magnificent 7
- Mini Cooper SE: The British icon gets an all-electric makeover
- Tesla unveils new Model 3 Performance - it's the fastest ever!
- Avon Protection handed £38m gas mask contract by MoD
- Ford confirms it will cull another of its best-selling...
- Watches of Switzerland buys Italy's Roberto Coin Inc for...
- ITV hit by Hollywood strikes as it pins hopes on Euros...
- Why we need more than a British Isa to move the dial on...
- Mortgage rates are climbing again - should we be worried?...
- Used car sales hit a five-year high as fresh supply of...
- BUSINESS LIVE: BoE base rate decision; ITV eyes ad market...
- BAE Systems tools-up for growth as Britain plots defence...
- Snoop Dogg cannabis firm to ditch London after losing 97%...
- Drivers abandon Direct Line after insurance premium hikes
- Hedge fund tycoon's £34m silver salvage claim sunk at the...
- Controversial Brewdog founder James Watt steps downs
- We do need to resolve inequality admits £8m-a-year...
- TSB to close one in six branches: More than 6,000 shut by...
- Oil industry engineer Wood Group rejects £1.4bn Dubai...
- Millions kept in the dark over City watchdog's mystery...
- Spring property bounce is a damp squib - Rics estate...