PartyGaming, 888 and America: different strokes
PartyGaming and 888 are online gaming operators with very similar histories but very different outlooks; as recent months have made plain.
PARTYGAMING AND 888 are online gaming operators with very similar histories but very different outlooks; as recent months have made plain.
Both businesses are Gibraltar- based. Both caught the eye of investors by making a killing offering online poker and casino to Americans. And both faced the disappearance of roughly three quarters of their business overnight when America’s internet gaming ban came into force three years ago.
Another similarity between the two businesses, fortunately, is that both recovered from what could have been a fatal blow. What sets them apart is their attitude towards the US market now.
For 888, that attitude is a downbeat one. Even if America does go ahead and end its prohibition on egaming, chief executive Gigi Levy predicts it will be protectionist and restrict egaming licences to Harrah’s, MGM and America’s other big operators.
Speaking at the Gaming Executive Summit in Madrid July, Levy (pictured right) cautioned that America’s “withdrawal from its GATS (general agreement on trade and services) commitments means it doesn’t have to conform to any WTO regulation on internet gambling. There are five other states [with California] we know of that are considering regulating online poker, and we know the licences will go to US companies.”
The contrast with PartyGaming’s attitude on US regulation could scarcely be greater. Putting its money where its mouth is, Party’s optimism about its return to the US market has already seen it shell out US$105m to become the first, and so far only, European operator to reach a settlement with the US authorities over its US business pre-Unlawful Internet Gambling Enforcement Act.
Free trade?
Speaking at eGaming Review‘s Power 50 summit in May, Party chief executive Jim Ryan (pictured below) said the company had a head start on other European operators looking at the US market, reminding the gathered executives that “we have a settlement and you don’t”.
That claim is now the cause of much less envy among rivals.
Doubts were raised in July by the unveiling of Senator Roberto Menendez’s Internet Poker and Games of Skill Regulation, Consumer Protection and Enforcement bill, which contains a clause allowing the treasury to reject applicants who have failed to file “a federal or state tax return (“¦) owed to a jurisdiction in which the applicant operates or does business”.
The clause, identical to one contained in the earlier bill to legalise online gambling submitted by Representative Barney Frank, is widely seen as a protectionist measure designed to allow the US to exclude foreign operators. Its presence in the new bill as well as the old is a sign that both politicians believe their bills are unlikely to be backed without it. America talks the talk on free trade, but rarely walks the walk.
Other commentators have suggested that states will opt out of any federal egaming law simply to favour intrastate alternatives that allow them tighter control of tax revenue.
That option is more appealing to more populous states that are more likely to have sufficient liquidity to go it alone “ and in particular to California, which is in dire need of extra tax funds to fix its budget crisis.
All of which could serve to make Party’s multi-million pound lobbying efforts redundant.
However, a spokesman for Party told eGaming Review that the gaming giant considered it too early to refocus. “Bills go through lots of different stages,” they said. “What’s encouraging is that America is looking to re-open the market, and we are going to look at ways to re-enter that market.”
It will all depend on whether Party is looking in the right place.
This article first appeared in the September issue of eGaming Review.
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