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Poker News | Casino Poker | Tournament Reports

Fire Sale on Online Gaming!

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With the signing of the Unlawful Internet Gambling Enforcement Act (UIGEA), many companies that have dealt with US gamblers and poker players are changing the way they do business. Party Poker, once the world's largest online poker room, has pulled out of the US market completely. Firepay, one of the two largest money-transfer firms used by poker players, has followed suit. PokerStars, FullTilt Poker and Tony G Poker have announced even more attractive reload and first deposit bonuses to pick up homeless poker players, and several other online gaming firms have taken an unusual, and possibly improper, tactic for their US operations - they sold them to shareholders for $1.

Sportingbet (owner of Paradise Poker) and Leisure & Gaming (owner of Nine.com) have sold their US operations and websites for $1 each, Sportingbet to Jazette Enterprises, and Leisure & Gaming to a newly-formed company headed by L&G former CEO Alistair Assheton, who has very recently resigned from the business. Excapsa Software (powers UltimateBet.com and other gaming sites) has also sold its assets in the face of this legislation, but for a price more reasonable for a major player in the online gaming industry - $130 million.

In addition to relieving themselves of the trouble of dealing with the UIGEA legislation as a publicly traded company, Sportingbet announced that it saved nearly $14 million in costs associated with closing down those US operations. Jazette agreed as part of the purchase to accept no wagers outside the US for two years, and outside the Americas for three years, leaving Sportingbet to pursue growth markets like Australia and Europe.

Sportingbet's executive Andrew McIver said "We are saddened to have to dispose of such a fantastic business as a result of political actions in the US Congress." Sportingbet's sale of US assets continues a troubled 2006 for the gaming company, coming shortly after the resignation of CEO Peter Dicks, who had been arrested in New York this year on an open Louisiana warrant for "gambling by computer," but released when New York Governor George Pataki could find no legal grounds to extradite Dicks to Louisiana.

Leisure & Gaming's actions in selling their US operations to the newly created company of their former executive have raised some eyebrows on the London Stock Exchange, and trading of the company's stock was suspended late last week. At question was the propriety of the sale without prior stockholder approval.
According to the BBC News website, "The AIM-listed firm said it had sanctioned the sale without prior shareholder approval since it would avoid about $6m in liquidation costs and it believed this was in investors' interests. But it admitted the transaction - which it said would enable the firm to continue operating and would be put to a shareholder vote in due course - may ‘constitute a technical breach' of stock market rules."
A spokesman for the London Stock Exchange confirmed that they would be investigating the sale.

Both companies cited the expense of closing down their US operations as a factor in choosing to sell off those portions of their business instead. Excapsa Software chose a similar approach, but did not go the fire-sale route.

Excapsa announced the sale was effective October 12, 2006, one day before President Bush signed the SAFE Port Act (the bill with the UIGEA attachment) into law, but was subject to ratification by the company's shareholders. Blast Off Limited, a privately held company based in Malta, agreed to purchase the company in a five-year planned transaction totaling $130 million. Excapsa is currently planning to withdraw from trading on the London Alternative Investment Market and making dividend payments to stockholders.

Blast Off is a Malta-based private company that currently licenses Excapsa software. According to Pokernews.com, "Blast Off Ltd. operates Online Elimination Blackjack TM and was associated with Excapsa via the Ultimate Blackjack Tour, the brainchild of former WSOP Champion and Team UltimateBet member Russ Hamilton."

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