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| Simon Bowers and
Angela Balakrishnan Anurag Dikshit, co-founder of the online gaming group PartyGaming, saw the value of his stake in the firm jump by £42.3m to £198m yesterday after he became the first high-profile internet gambling tycoon to willingly face justice in a US court. His residual holding in the group was last night worth almost exactly the same as the $300m (£196m) he agreed to forfeit to the US courts as he admitted offences against the wire act relating to PartyGaming's one-time market-leading operations in the US. Yesterday the company's share price leapt 27% after PartyGaming issued a statement making clear it too was "negotiating the final terms of a possible settlement with the department of justice". The company added it expected any deal to involve a payout "substantially lower" than the $300m offered up by Dikshit. Some analysts estimated the company's settlement could be less than $100m - comfortably within the firm's cash resources of $149m. PartyGaming and its founders have been targeted by US prosecutors for years but had managed to stay beyond the grasp of the authorities by operating from internet servers based in Gibraltar. But, like many online gambling firms, PartyGaming was forced to close its American operation - representing about three-quarters of its business - almost overnight two years ago after George Bush passed laws targeting internet gaming payments channels. Dikshit retains a 28% interest in PartyGaming, which is now primarily focused on European and Asian markets, and his representative, Emilio Gomez, sits as a non-executive on the board. In recent years he has taken £529m from the business in shares and dividends - more than his three co-founders: former British Gas analyst Vikrant Bhargava, one-time internet porn entrepreneur Ruth Parasol and her husband, Russ DeLeon. These three are believed to have hired legal teams to monitor what is expected to be a landmark case for the industry. Developments will also be watched by founders and executives of the London-listed 888.com and Sportingbet, both of which are also believed to be in discussions with the department of justice. Dikshit signed a cooperation agreement and US prosecutors indicated they might submit a letter to the judge asking for leniency at sentencing. He could face up to two years in jail. However, a lighter sentence is thought more likely to encourage a wave of similar deals related to past internet gaming activities in the US. The authorities are believed have a much less conciliatory attitude to those firms that have continued to take bets from the US since 2006, led by privately owned PokerStars and Full Tilt Poker. A source who knows Dikshit said yesterday that the internet tycoon flew to New York after about 18 months of negotiations with US prosecutors. He was understood to be keen to remove uncertainty over any extradition attempts. PartyGaming floated on the London Stock Exchange in 2005, allowing Dikshit and his co-founders to sell 23% of the business to UK institutional investors. As well as London's substantial capital markets, the company was attracted to Britain by the government's liberal approach to offshore online gambling groups. PartyGaming's flotation prospectus said: "The department of justice considers that companies offering online gaming to US residents are in violation of existing US federal laws, including the wire act." Yesterday, PartyGaming said: "Whilst these discussions are at an advanced stage, the terms of any settlement have not yet been finalised and there can be no guarantee that an agreement will be reached." |
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