PartyGaming Principal Shareholder’s Guilty Plea to Wire Act Violations Angers Former Colleagues and Just About Everyone Else in the Online Gaming Comm

by Lou on December 31, 2008

When Anurag Dikshit (pictured left), a principal shareholder of PartyGaming Plc, pled guilty in mid-December to charges under the 1961 Wire Act—the first time this Act was applied to any form of Internet gambling beyond sports betting—he angered a lot of former friends, colleagues, and industry competitors, and in the process, may have set a dangerous precedent.

Despite never offering sports betting and ceasing to accept US customers for its poker and casino games when the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed in 2006, United States District Judge Rakoff accepted Anurag Dikshit’s plea and a fine of $300 million. The maximum prison sentence under the Wire Act is two years and the date for sentencing was deferred for up to two years.

Dikshit’s plea led Clive Hawkswood, CEO of the Remote Gambling Association’s (RGA), a trade association representing the largest, licensed, stock market listed, remote gambling companies, to urge the European Commission to protect European Union interests against enforcement by US authorities—enforcement that Hawkswood claims violates treaty obligations.
He added, “The US authorities, it seems, have succeeded in pressuring a major shareholder into making a deal. A major line has been crossed and it could set a very worrying precedent.”Rep. Robert Wexler (D-FL), Chairman of the Europe Subcommittee in the House Committee on Foreign Affairs, said: “It is of critical importance that we find an effective and immediate way to regulate and tax internet gaming in order to avoid a serious trade dispute with the EU, which, in turn, could have global trade repercussions for the United States. The retroactive and discriminatory enforcement against EU parties, who ceased operating in the US a long time ago, has directly led to an escalating trade dispute with the EU.”

In addition to upsetting various political apple carts regarding European and US interests in online gaming, Dikshit’s decision created a rift with his former Party Gaming colleagues, And likely troubled executives at other big online gaming companies too.

Even Doyle Brunson, a man not known for criticizing others in the poker community was riled up over this, saying, “It looks like he would feel a sense of obligation to online poker, the industry that made him a rich man. Instead, he folded up like an accordion and pled guilty to breaking some kind of mystery law and is paying a 300 million dollar fine and possible 2-year jail term … I personally can’t imagine what was going through his mind when he made his decision.”
Dikshit’s decision to fold his hand now is strange timing. After all, the incoming Obama administration is likely to put online gaming and the enforcement of UIGEA low on its list of priorities, if it makes their list at all. Party Gaming’s other three founders are reportedly upset because they believe they did no wrong, since offering online poker to American citizens was not an issue until UIGEA was passed in 2006—and Party stopped doing business in the United States immediately thereafter.
Dikshit will be formally sentenced in two years’ time. While two years in prison is a possibility, it seems unlikely that he’ll spend any time behind bars. Between now and his sentencing date, he is expected to help the American authorities with their inquiries into the world of online gaming.
Nevertheless, his guilty plea is a coup for the US Department of Justice. While DoJ actively pursued overseas companies that allowed American citizens to play on their websites, all of these other firms offered sports betting, in clear violation of the Wire Act. David Carruthers, a Scot who ran online sporting bookmaker BetonSports, was detained in America while changing planes to fly to Costa Rica in July 2006 and awaits trial. Executives of online gambling firms all face the risk of arrest if they travel to the US.

{ 1 comment }

Disciples of Poker January 1, 2009 at 4:39 pm

another sad day for on-line poker.

The poker lobby efforts are impotent against washington powerbrokers.

Damato has been a bust as well.

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