Sportingbet Settles with US Authorities

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Sportingbet is an online gaming operator that offers products like sports betting, casino games and poker over the Internet. Following in the footsteps of PartyGaming and Neteller, Sportingbet has announced a settlement with the United States Department of Justice (DoJ) for its operations in America prior to the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in October 2006. The non-prosecution agreement has been entered into with the Southern District of New York, which is acting on behalf of the DoJ. Under the agreement Sportingbet has consented to pay $33million in three instalments. The first instalment of $15million will have to be paid before September 30, 2010. The second instalment of $12 million is due on or before September 30, 2011, while the final instalment of $6 million is due on March 31, 2012. Sportingbet had earlier indicated that the settlement amount could be in the range of $50 million. Sportingbet group chief executive Andrew McIver informed that as a result of protracted negotiations spread over three years the amount was brought down. Apart from the monetary outflows Sportingbet has had to agree to certain other conditions. It will have to cooperate with the DoJ by disclosing information relating to its former online gambling business in the United States. It will also have to meet all legal requirements with respect to its future conduct in the United States.

The objective of the settlement was to put a lid on the events of the past. McIver said, "It is in the best interests of our shareholders and we can now look to the future with increased confidence." The online gaming industry is anticipating a phase of consolidation and the outstanding liabilities and legal risks in the United States was till now preventing Sportingbet from taking part in any meaningful consolidation activity. McIver added, "...the group is well placed to capitalise on the many opportunities available in the global online gaming industry."

At one time Sportingbet was in merger discussions with both Bwin and PartyGaming, but neither reached fruition because of pending issues in the United States. As events unfolded, Bwin and PartyGaming entered into a merger agreement with each other creating the largest listed online gaming entity in the world. Finance director Jim Wilkinson said that there are no deals in the pipeline. He also indicated that it is too early for anything to happen. One of the issues that would determine any merger possibilities is the effect on online gaming revenues as European markets regulate.

The aftermath of the UIGEA was a nightmare for Sportingbet. It had to sell of its prize asset, Sportsbook.com to Jazette Enterprises for only $1 and also sell of its popular online poker room Paradise Poker. Sportingbet lost around £55 million in the process.

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