888 Holdings Initiates Talks With DOJ Following PartyGaming's Lead888 Holdings has initiated talks with the United States Attorney's Office for the Southern District of New York following PartyGaming's announcement yesterday that they had done the same.
888 said it started the talks following uncertainty over the likelihood of action by US law enforcement agencies regarding activity in the US prior to the enactment of the Unlawful Internet Gambling Enforcement Act (UIGEA) last October.
Both Party and 888 Holdings have been working hard to stimulate their respective share prices, which were decimated following the October move out of the US marketplace. Both companies had more than 80% of their customer base out of the US.
888 said it is too early to assess the possible outcome of the discussions but added a further announcement will be made 'if and when appropriate'.
The moves have some US players concerned that the poker firms will begin providing the DOJ with confidential customer information that can be used for collection of unclaimed taxes. Gambling911.com encourages its readers to claim all gambling-related taxes derived from online gambling winnings.
For others, these talks signal something positive.
James Hollins, an analyst at broker Daniel Stewart, believes this is 'the most sensible route for operators that used to offer their services into the US, essentially working with the authorities to hopefully draw a line under any potential ongoing litigation'.
Numis analyst Richard Carter also believes the talks are a positive development for the industry.
'Although it is too early to assess the outcome of these discussions, our intelligence tells us that there now appears a willingness on behalf of the US Attorney's Office to settle and draw a line under the uncertainty caused by recent DoJ actions,' he said.
Carter identified 888 as his 'key pick' in the sector given its 'strong pipeline of new game and product development, improving trading momentum and ability to expand acquisitively given the group's cash balances'.
Numis has a 'buy' recommendation and 172 pence price target on the stock.
Yesterday, 888 shares closed at 116 pence, valuing the company at just over 390 mln stg.
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Christopher Costigan, Gambling911.com
Originally published June 5, 2007 8:32 am ET
