PartyGaming Inks Deal to Purchase the World Poker Tour

When news of Gamynia Limited’s agreement to purchase the World Poker Tour was reported earlier this month it seemed like a done deal. That was until news of a clause that permitted the WPTE to opt out of the deal if a better offer was put on the table before the sale to Gamynia Limited was voted on by shareholders -with a fee of $1,000,000. Gamynia’s offer was for just over $9mil, and at the time it seemed unlikely anyone would go over the $10mil mark needed to offset the $1,000,000 cancellation clause.

When Gamynia Limited made its offer the WPT had recently come off its first profitable quarter in almost two years. However, when the WPT [posted a second straight profitable quarter a bevy of potential suitors entered the negotiations, and speculation was the Gamynia offer would be trumped.It was at this time that PartyGaming became the proverbial ‘Elephant in the room’ and made a $12.3mil offer to purchase basically all of the WPTE assets. In addition to the $12.3mil, PartyGaming will pay the WPTE an ongoing 5% participation in revenues.

Prior to the 2006 passage of UIGEA regulations, PartyGaming was the #1 trafficked Online Poker site. When UIGEA legislation was passed PartyGaming was among the numerous Online Poker sites to withdraw from the US market (according to pokerscout.com PartyPoker is still the #3 most heavily trafficked Online Poker site despite it’s no US players policy).

The purchase of the WPT is another indication that PartyGaming is eyeing a return to the US market in the near future. Earlier this year PartyGaming founder, Anurag Dikshit, plead guilty to violating the 1961 wire act, and paid in the neighborhood of $300mil (Dikshit’s estimated net worth in 2007 was $1.6bil).

With the above settlement and the purchase of the WPT, it would seem that PartyGaming believes at least one of the two bills introduced to Congress will pass. In the Senate Barney Frank (D-MA) introduced a bill to legalize and regulate the entire online gaming industry (with the exception of sports-betting), along with a secondary bill to overturn UIGEA legislation. In the House of Representatives, Robert Menendez (D-NJ) introduced a bill that would legalize and regulate online games of skill, including poker.

Both bills seek to legalize, regulate, and tax the gaming industry which currently falls outside of US laws and tax codes (all online gaming sites operate overseas). With an emphasis on controlling problem gamblers and underage gamblers, creating revenue through taxation, and licensing companies the passage of the bills would only improve the current conditions of the industry, which is extremely unregulated at this time (think Fannie and Freddie before the current recession).