UK newspaper The Guardian has speculated that the request by French
authorities for interviews with a reported 20 online gambling company
executives could presage a US-style crackdown on the industry in that
country.
And staff writer Simon Bowers writes that Party Gaming quietly closed
its website to French customers last Friday without telling investors.
Just three days later one of the firm's largest shareholders sold
123 million shares worth some GBP 50 million.
Bowers goes on to claim that 888 Holdings and others are also believed
to have frozen efforts to target the French market.
Whilst Party Gaming is apparently not among those with whom the French
have requested an interview, the company reports its full-year results
tomorrow, and refused to comment to the Guardian on its reasons for
the French shutout.
The Guardian article opines that France's position appears to be at
odds with European Union competition rules on gambling, which many
offshore operators hope will be strengthened next week with publication
of a landmark judgment from the European court of justice.
But industry insiders are wary that France has stepped up lobbying
efforts in Brussels, fearing that open competition - particularly
from online firms based in offshore tax havens - could destroy the
PMU French monopoly on which domestic horse racing relies for funding.
One industry source consulted by the Guardian estimated that France
could generate between 5 percent and 10 percent of Party Gaming's
continuing revenues following the closure of its US business last
autumn.
Another suggested France must contribute less than 5 percent to revenues
or Party Gaming would have been forced to make a stock market announcement.
The company was one of the first online operators to provide betting
services via a French language website. Last summer it acquired sports
betting site Gamebookers, a well-established brand in France. Industry
insiders said Party Gaming's French business had been viewed as having
huge potential for growth.
The company's closure to French customers came on the day letters
were received by online operators requesting executives to attend
interviews in France. Those contacted are believed to include Unibet,
which has targeted the French market through its Mr Bookmaker business.
The letters invite executives for interview, but the authorities are
understood to have made clear an alternative approach might be to
issue arrest warrants.
Last September the founders of Bwin, Manfred Bodner and Norbert Teufelberger,
were arrested by the French authorities at a press conference they
had called to publicize a shirt sponsorship deal with AC Monaco. They
were bailed days later but told they could face up to three years
in jail if found to have contravened laws on gambling advertising.
Afterwards, French football league officials placed a ban on online
gambling firms offering shirt sponsorship. As a result, AC Monaco
was forced to drop its shirt deal with Bwin. Similar tie-ups linking
888 with the Toulouse team and Gamebookers with Nantes were also dissolved,
the Guardian reports.
London-listed 888 Holdings confirmed Guardian reports that non-executive
director John Anderson, who was chief executive of the business until
the end of last December, had received a request from the French authorities.
He is expected to attend a meeting on March 13 to put the company's
case.
Industry insiders were concerned to see inquiries extending beyond
sports betting - which 888 does not offer - to online poker or casino
games.
Party Gaming insisted no letter requesting an interview had been received.
Nevertheless its shares fell 9.4 percent Tuesday. It is unclear which
Party Gaming shareholder was behind Monday's share placing but the
company must announce it this week.
The only investors with such large holdings are the firm's four founders
- Vikrant Bhargava, Anurag Dikshit, Ruth Parasol and her husband Russ
DeLeon - as well as Fidelity and the Bermuda and London-based hedge
fund Orbis. It is understood not to be Ms Parasol or Mr DeLeon.