Last week saw Party Gaming Co-Founder Anurag Dikshit admit wrongdoing under the Wire Act of 1961. He agreed to pay $300 million to United States Federal authorities in the process, $100 million of which has already been turned over. A review of the filing against Dikshit reveals that online poker was specifically named in the case.
The Wire Act has typically only applied to online wagering on sporting events. However, in this case, online poker was specifically called out. Dikshit, who appeared in front of the Southern District Court of New York, was charged with “being engaged in the business of betting and wagering, [and] unlawfully, willfully, and knowingly [using] a wire communication facility for the transmission in interstate and foreign commerce of bets and wagers on any sporting event and contest.”
Dikshit was involved in building Party Gaming’s software platform between 1998 and 2006. Beginning in 1999 and lasting for the next seven years, he served as one of the company’s principal shareholders. News reports stated that Dikshit currently owns 27% of Party Gaming, which is traded on the London Stock Exchange under the symbol “PRTY.” The stock boomed when word spread of his agreement with U.S. authorities, one of the first such accords reached since the 2006 passage of the Unlawful Internet Gambling Enforcement Act (UIGEA).
Background given in the three page filing indicates that Dikshit “operated an internet gambling business that offered casino and poker games, among other games of chance, to customers who wished to wager online.” The Poker Players Alliance (PPA), the main lobbying group for the online poker industry, commented on the situation by saying, “We do believe this action further clouds the U.S. regulatory and legal environment as it relates to online poker.” The PPA added that the Fifth Circuit Court of Appeals ruled that the Wire Act should only apply to online wagering on sports. The UIGEA does not specify what is and is not legal under it.
When the UIGEA was passed during the final moments of the 2006 Congressional session, PartyPoker was one of the first online poker rooms to exit the market. Other publicly traded internet gambling companies include 888 and SportingBet, which also appear on the London Stock Exchange under the symbols “888” and “SBT,” respectively. Pacific Poker and Paradise Poker, which are owned by the two aforementioned companies, have also exited the market.
Since the 2006 law was passed, a cloud has hung over the heads of Party Gaming and others in the market, which could potentially stunt future business opportunities. Dikshit’s move may help to clear the air. The charge notes that about 85% of Party Gaming’s customers in 2005 were from the United States. At the time, PartyPoker was one of the largest online poker rooms on the planet, even hosting an event held as part of the World Poker Tour.
At the close of business on Monday, PRTY stock was down ₤12.25 to ₤189.75. Its 52 week range has been an erratic one, vacillating between ₤17.50 and ₤312.00. It’s been a roller coaster ride for shareholders. However, the stock has nearly doubled from ₤95.00, which it closed at on November 19th. The case involving Dikshit received international attention and many major news outlets believed that an important precedent would be set one way or another.
Dikshit resides in Gibraltar and is originally from India. His travel agreements allow him to visit Manhattan in the United States. The New York court is located in White Plains.
