Online Casino News and Information

MARKET WATCH - DOW JONES
By Sarah Turner, MarketWatch
Last Update: 9:34 AM ET Jan 22, 2007

LONDON (MarketWatch) - Shares in online gambling companies PartyGaming, SportingBet, 888 Holdings and Empire Online slipped once more in London on Monday after published reports that the U.S. government has requested British banks hand over transaction details of their dealings in the online gambling sector.

PartyGaming (UK:PRTY: news, chart, profile) shares lost 7.3%, SportingBet (UK:SBT: news, chart, profile) shares dropped 7.4%, 888 Holdings (UK:888: news, chart, profile) lost 2.9% and Empire Online (UK:EOL: news, chart, profile) declined 1.7% in the London stock market.
PartyGaming shares hit a high of 179.5 pence in 2005 but were trading at just 28.25 pence on Monday, while SportingBet shares traded at a high of 452 pence last year. On Monday, SportingBet’s shares were valued at 34.5 pence…..

“It’s a regulatory sentiment issue,” said Andrew Lee, a leisure sector analyst at Dresdner Kleinwort. “People are trying to put a value on the risk of the U.S. trying to claw back some money and what impact it might have in terms of sentiment and share price.” He noted that so far, actions from the U.S. have been significantly more negative than expected by the market. The sector slumped in early October when the U.S. Congress unexpectedly passed legislation that will make it a criminal offence to receive funds related to any online gambling activity that is illegal under state or federal law.
Also, several online gambling senior executives and shareholders of these companies have been arrested in the U.S.

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BUSINESS WEEK

By JANE WARDELL
BW Exclusives
LONDON

Shares in European online gambling companies fell as much as 14 percent Monday on news that U.S. prosecutors had launched a probe into Internet gambling.

The U.S. Department of Justice has sent subpoenas to about 15 investment banks across Europe and in the United States, requesting information as part of a probe into gambling companies including Britain’s PartyGaming PLC and payment networks such as Neteller PLC, banking officials said.

The banking officials, who spoke on condition that they not be identified by name because they were not authorized to do so, said that the subpoenas were received shortly after Christmas.

Dresdner Kleinwort, Deutsche Bank, HSBC and JP Morgan declined to comment on reports they were among the banks to receive subpoenas. Citigroup Inc. and Bank of America Corp. officials did not immediately return calls for comment Monday.

The U.S. Department of Justice declined to confirm the investigation.

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TIMES ONLINE
Rhys Blakely

Senior bankers and leading politicians have attacked demands from the American Department of Justice for British bankers to hand over details of their dealings with online gambling companies outlawed in the US. After calls on the British Government to spell out the limits of the US authorities’ reach, the Treasury said last night that it was monitoring the situation.

Subpoenas have been issued by the Southern District Court of New York to at least 16 banks, including HSBC, Dresdner Kleinwort, Credit Suisse and Deutsche Bank. The official demands for e-mails, telephone records and other documents form part of a controversial push by the Department of Justice (DoJ) to build cases against individuals and companies who profited from online gaming in the US.

Alan Duncan, Shadow Trade and Industry Secretary, said: “There is growing suspicion that the US Department of Justice is using its muscle in a highly unpleasant manner, and is targeting financial institutions beyond their own shores in a way that cannot be justified. I hope the Department will stop and review its approach so that its behaviour doesn’t sour relations between us.”

Vince Cable, the Liberal Democrat Treasury spokesman and a former chief economist for Shell, said: “This appears to be another case of extra-territorial and retrospective action from the US authorities that goes against two basic principles of justice.”

A senior banking source, who asked not to be named because of the “immense legal complexity and sensitivity” of the issue said: “The US is saying to itself, ‘We must get somebody’, and in the process it seems to think it can foist . . . US legislation, even individual state legislation, on anybody.

“They are going after parties removed several steps from the business of gambling. To pursue say, an adviser on a float is frankly ridiculous. It is a straightforward case of the Government being responsible for setting and arranging sensible boundaries on what the US can request.”

London, which became the fundraising centre of choice for the internet gambling industry, is at the heart of the DoJ investigation. It has emerged that the first subpoenas date back to October, only days after George Bush effectively banned online gaming by outlawing related transactions, such as credit card payments. Fresh demands were made as recently as three weeks ago.

Deutsche was co-broker to PartyGaming, the largest online gaming company. PartyGaming was advised by Dresdner on its IPO in 2005, which raised £5 billion and propelled the company into the FTSE 100. HSBC advised 888.com on its £590 million IPO later in the same year. Credit Suisse had advised the company’s former shareholders.

Another banker said: “This is a massive, ongoing fishing trip. Everyone — the bankers, the lawyers — who was involved in the IPOs or had ongoing business with these companies is in the same boat.”

The Home Office would not comment on whether it had received a request from the US for “mutual legal assistance”, a statutory precursor to the US authorities conducting an investigation in the UK. The Department of Justice did not return calls. None of the banks involved would comment.

THIS ARTICLE PUBLISHED JANUARY 22, 2007 AT TIMES ONLINE

THE SUNDAY TIMES - TIMES ONLINE

January 21, 2007
By: Jenny Davey

THE US Department of Justice has ordered the world’s biggest investment banks, accountants and law firms to hand over all e-mails, telephone records and papers connected with internet gaming firms as part of an investigation into illegal online gambling in America.

HSBC, Dresdner Kleinwort, Credit Suisse and Deutsche Bank are known to be among the banks that have been issued with subpoenas — official requests for information — as part of a worldwide hunt to build a case against those who benefited from illegal online gambling.

Britain has been the fundraising centre for many internet gambling companies, with a number of international operators listing their shares in London.

Fortunes were made by the founders of internet gaming stocks, including Party Gaming, 888.com and Betonsports.com, and advisers pocketed huge fees.

The Department of Justice first issued subpoenas in October, only days after George Bush sounded the death knell for America’s $6 billion (£3.2 billion) internet gambling industry by signing legislation banning all related transactions. But until now the investigation has been kept secret.

According to City sources, the subpoenas have continued to arrive over the past few weeks.

It is thought that some investors in online gambling companies, including Party Gaming and 888.com, have also been hit with requests for information.

One source said: “To say the situation is sensitive is the understatement of the decade. The problem is, even if you know you have done nothing wrong, you have no powers of resistance.”

He added: “You can quickly go from being a bystander to a target, so even if you are bomb- proof, you have to assume you are subject to hostility.”

The source went on: “The Department of Justice has taken a shotgun, not a rifle approach in relation to lots of gaming companies and has just asked everyone to hand over all the information they have.”

The request could force banks and other advisers or former advisers to the gambling companies to hand over hundreds of thousands of e-mails and files to American investigators.

Another City source familiar with the circumstances said: “There is no doubt at all that this situation is escalating. This has definitely got legs.”

Another source described it as one of the biggest “fishing expeditions” ever undertaken by the Department of Justice.

Vast riches were made by the founders of internet gambling companies, including Party Gaming and 888.com. Party Gaming floated with a value of £5 billion in the summer of 2005, propelling it straight into the FTSE 100 index ahead of British household names such as British Airways and ICI. Its four founder shareholders — Anurag Dikshit, Vikrant Bhargava, Ruth Parasol and her husband, Russ DeLeon — took out £797m and valued their remaining shares at about £ 3.3 billion. Meanwhile, 888.com, which floated in September 2005 valued at £590m, created another batch of dotcom millionaires, this time among the company’s Israeli founders. Avi and Aharon Shaked received more than £10m from selling a quarter of their 70% stake.

The probe by the Department of Justice will spark outrage in Britain, coming so soon after the extradition of the so-called NatWest Three to America.

UK plc should be really worried about yet another encroachment of American investigators on to British territory. The City is clearly under threat,” said one British businessman who asked not to be named.

The subpoenas do not reveal whom the Department of Justice is targeting. But some believe the ultimate goal is to find information incriminating the founders of the online gambling firms.

The inquiry vindicates the City professionals who refused to act for internet gambling firms because of the uncertainty about its legality in America. Banks that have been subpoenaed have lined up lawyers to act for them.

None of the banks involved would comment on the subpoenas. The Department of Justice also said that its policy was not to comment about ongoing investigations.

HSBC advised 888.com, one of the most high-profile internet gambling companies, on its flotation. Credit Suisse advised the original shareholders of 888.com on their strategic options before the flotation. Deutsche is co-broker to Party Gaming, while Dresdner advised on its public listing.

HERALD TRIBUNE

Internet company founder released on bail by U.S. Virgin Islands judge
The Associated Press
Published: January 18, 2007

CHARLOTTE AMALIE, U.S. Virgin Islands: A Canadian man charged with laundering billions of dollars (euros) from Internet gambling transactions posted bail Thursday in the U.S. Virgin Islands and was released into the custody of an FBI agent.

U.S. District Court Magistrate Judge Geoffrey Barnard released Stephen Eric Lawrence on US$5 million (€3.8 million) bail, half of which was transferred by wire to a New York City court clerk’s office before his release.

Provisions of the release require Lawrence to board a direct commercial flight to New York under FBI supervision and surrender his passport. He must then appear at a Jan. 26 court hearing in New York.

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HERALD TRIBUNE
The Associated Press
Published: January 18, 2007

LAS VEGAS: Though payment processor Neteller PLC is the latest and largest such company to pull out of the lucrative but illegal U.S. online gambling market, industry observers said other e-wallet sites would come forward to take its place…

…The arrests were the latest in a series of enforcement actions by the U.S. government against the online gambling industry. The crackdown has targeted the financial middlemen who sprung up after credit card companies and PayPal gave in to pressure to stop processing online gambling transactions from U.S. customers in 2001…..

…”What you’re finding with the Internet gambling sites is the publicly traded ones and prominent ones are leaving,” said David Stewart, an online gambling expert and lawyer with Washington, D.C.-based firm Ropes & Gray LLP…

…”The entities that are more visible and are more transparent can’t take the heat,” he said. “And all the rest of them are still in the business.”

…Michael Bolcerek, president of the online poker lobby group, Poker Players Alliance, said the withdrawal of brand name providers would encourage the emergence of less trustworthy money dealers.

“People are going to migrate to nonpublic, less transparent methodologies,” he said.

Poker magazine publisher Eric Morris of Bluff Media LLC said the withdrawal of PayPal and major credit card companies from the U.S. online gambling business in 2001 caused a panic that didn’t last.

“The industry took a bit of a dive and came back stronger than ever before,” he said. “The bottom line is that people are going to find a way.”

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NEW YORK POST

January 18, 2007 — CHARLOTTE AMALIE, U.S. Virgin Islands - A Canadian man who founded a firm that processes Internet gambling transactions was led into a U.S. Virgin Islands court in ankle chains to face money-laundering charges yesterday.

Stephen Eric Lawrence, 46, was accused of funneling billions of dollars in illegal gambling proceeds to overseas betting operations. The former NETeller PLC director was arrested on the island of St. John on Monday on a warrant from the U.S. Attorney’s office in New York, said FBI agent Donald A. Neily.

District Court Judge Geoffrey Barnard said he intended to set bail at $5 million at a hearing tomorrow.

Lawrence, who lives in the Bahamas, and John David Lefebvre, 55, are former directors of the Internet payment services company, which have become popular as more of credit card companies have begun refusing to accept payments to online gambling sites.

Lefebvre was arrested Monday in Malibu, Calif. Both men are Canadian citizens.

In 1999, the men founded NETeller, which is based in the Isle of Man and is publicly traded in the U.K. The company began processing Internet gambling transactions in 2000.

READ THE COMPLETE ARTICLE AT NEW YORK POST

HOUSTON CHRONICLE - cron.com
Jan. 18, 2007, 3:43AM
By ROBERT BARR - Associated Press

LONDON — Neteller PLC, a Britain-based online money transfer business, said Thursday it is ceasing to handle gambling transactions from U.S. customers because of restrictive legislation and uncertainties about regulations.

The company’s move came three days after former directors arrested and charged in the United States with funneling billions of dollars in gambling proceeds to overseas betting operations.

“As of today … at 12:01 AM GMT, U.S. resident customers were no longer able to transfer funds using Neteller’s services to or from any online gambling site,” the company said in a statement to the London Stock Exchange.

Neteller said it would focus operations on markets in Europe, Asia and other countries in the Americas.

Trading in Neteller shares on the London Stock Exchange was suspended Tuesday following the announcement of the arrests of the two former directors.

Neteller is an Internet payment services company that has grown in popularity as an increasing number of credit card companies have begun refusing to accept payments to online gambling sites.

Neteller essentially acts as a middleman between gamblers and offshore betting operations. For example, a gambler who wants to place bets at offshore sports books can fund an account with Neteller, which in turn will transfer the money to the betting sites. Prosecutors say Neteller facilitated the transfer of billions of dollars of illegal gambling proceeds.

On Tuesday, U.S. authorities announced the arrests of former directors John David Lefebvre, 55, and Stephen Eric Lawrence, 46, both Canadian citizens who were indicted by a grand jury in New York.

U.S. Attorney Michael Garcia said the men knew when they took their company public that its activities were illegal.

FBI Assistant Director Mark J. Mershon, assistant director of the U.S. Federal Bureau of Investigation, said the multibillion-dollar online gambling industry is “a colossal criminal enterprise masquerading as legitimate business.”

Lefebvre and Lawrence were charged in connection with the creation and operation of an Internet payment services company that facilitated the transfer of billions of dollars of illegal gambling proceeds from U.S. citizens to the owners of overseas Internet gambling companies.

Lefebvre was arrested Monday in Malibu, California. Lawrence, who resides in Paradise Island, Bahamas, was arrested Monday in the U.S. Virgin Islands.

They joined in 1999 to found Neteller, which is based in the Isle of Man and is publicly traded in the United Kingdom.

Lawrence left the company’s board of directors in October and Lefebvre left in December 2005, prosecutors said.

The company’s announcement noted the arrests of its former directors, but said the decision to cease gambling transfers in the United States “reflects the culmination of a series of deliberations and steps the group has taken since the passing of the UIGEA (Unlawful Internet Gambling Enforcement Act) in October 2006.”

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EGAMING REVIEW

Neteller has announced its complete withdrawal from the US gambling transaction market with immediate effect.

Fellow payments processor Citadel has also announced its official exit from the US.

The Neteller news came in a trading statement to the London Stock Exchange this morning.

It comes two days after founders and former directors Stephen Lawrence and John Lefebvre were detained by US authorities and charged with money laundering related to online gambling.

The statement said: “The group will cease processing online transactions related to gambling for the US market with effect from today in light of the passing of the UIGEA and the uncertainties and likely delays relating to the drafting and implementing of regulations.”

Neteller had previously signalled it would leave the US market in the wake of the passing of the UIGEA.

“Today’s withdrawal from the US market by Neteller is the culmination of months of careful planning. Along with this action, the group is actively assessing what further steps it may take in light of the two arrests made earlier this week to clarify the company’s position in this matter.”

The company added that all US customer funds were held in segregated accounts and were fully secure and are “available for withdrawal by customers on demand”.

In its statement today, Neteller said the group had experienced slowing fourth quarter growth in terms of receipts and new customer sign-ups.

It said it would continue with its focus on geographic diversification through further product launches in Europe and Asia.

The statement added that US customers made up 76% of its active customers in the fourth quarter. Of new sign-ups over the period, 74% were from North America.

Average daily receipts for the fourth quarter stood at US$5.75m. Average daily new customer sign-ups were 3,493. Revenue for the full year was expected to fall between US$255m and US$260m.

Neteller said it has already taken steps to develop country blocking software.

The Citadel news came in a statement by parent company ESI Entertainment to the Toronto Stock Exchange. It said the move came “in light of recent US Department of Justice enforcement actions against financial processor executives”.

EGAMING REVIEW

Former Neteller director John Lefebvre has been granted bail after an appearance in court in Los Angeles. According to Rebekah Carmichael, press spokesperson from the US Department of Justice, “he will be released after satisfying the bail conditions of $5m fully secured by cash or property; pre-trial supervision; surrender of all travel documents; and travel restricted to the Central District of California, except for trips to Southern District, New York for Court.”

The other former director Stephen Lawrence is currently in court in St Thomas in the US Virgin islands, attending an, “advice of rights” hearing.

Both defendants are being directed to appear in the Southern District, New York on January 26, 2007, though this is subject to change.