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Publicly traded online poker firm, PartyGaming, may end up paying the US government $20 million, assuming US officials plan on being especially generous. That number is based solely on Party's $138.9m in 2006 pre-tax profits and discounts the previous few years it accepted bets from US citizens. The number is also based on the US government wanting 15 per cent back in tax monies. PartyGaming has openly disclosed that they are working to settle any monetary issues with the United States. As such, it was revealed that few companies wish to deal with the one time largest online poker venture when it comes to partnership deals and potential acquisitions. For years, Party siphoned millions of dollars out of the US economy. 80 per cent of its customer base resided in the US. By attempting to settle with the US Government, they have essentially placed their heads on the chopping block. We can use the reformed bank robber wanting to pay back the bank analogy here but we won't. Party at one time was one of the biggest supporters of lobbyists in Washington looking to regulate online gambling prior to the passage of the Unlawful Internet Gambling Enforcement Act over a year ago. They immediately scrambled out of the US market but still remain a viable enterprise (the number three online poker room in fact). Both US and foreign companies cut their taxes by profit shifting, but many lawmakers and tax analysts believe the practice is particularly widespread among foreign companies. More than 70 percent of foreign firms paid no tax each year between 1987 and 1991, the IRS reports, compared to about 60 percent of US companies. Clearly, some paid no tax because they did not make a profit, but many lawmakers believe others are illegally shifting profits overseas. PartyGaming, while operating from the shores of Gibraltar, did have US citizens running the company at one time. Search engine giant, Google, was recently ordered to pay $31.5 million just for promoting online gambling companies. In the case of BetonSports, an online gaming firm shut down in 2006, the US Government said the company faced a maximum that could be double the financial gain from or loss caused by the enterprise. Neteller, a third party payment transfer company dealing in online gaming, did not get off so easy. They were required to pay a $136 million fine to the US Government after a settlement agreement was reached. ---- Christopher Costigan, Gambling911.com Publisher CCostigan@CostiganMedia.com Originally published January 7, 2008 12:38 am EST
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PartyGaming
May Have to Pay
US$20 Mil