By Christine Duhaime, B.A., J.D., Financial Crime and Certified Anti-Money Laundering Specialist
Ruth Parasol, the founder of PartyGaming Plc (Party Poker), now Bwin, is selling her 7% interest in Bwin to avoid the gaming regualtory vetting process in New Jersy, according to the Financial Times. Bwin hopes to be registered to provide services to Borgata, an Atlantic City casino. In order to be registered, service providers must undergo a suitability review process to ensure that they, and the persons and entities with whom they are associated do not negatively affect the integrity of gaming. Ms. Parsol is a former lawyer. She is alleged to have operated an online porn site before entering the online gambling field.
In 2010, PartyGaming Plc acquired all of the issued and outstanding shares in Bwin Interactive Entertainment AG pursuant to a reverse take-over. At the time, the merger was touted as a desirabe one to position the merged entity to re-enter the U.S. market when and if online gambling was legalized.
However, now that several states are permitting online gambling, there may be legacy issues that may be difficult for PartyGaming to overcome - the FBI Financial Crimes Report for Fiscal Year 2008 reported that Party Gaming Inc. "provided money laundering services to members of Italian organized crime." Accoridng to the FBI, as of the date of the 2008 Report, $100 million was forfeited by PartyGaming Inc. to the U.S. According to a Non-Prosecution Agreement, another $100 million was to be received within 90 days, plus another $100 million was to be paid at sentencing or no later than September 30, 2009. According to the FBI 2008 Report, PartyGaming Inc.'s principal, Anurag Dikshit, pled guilty in connection with the case and an additional $323,580,810 was forfeited from other subjects of the case. The FBI 2008 Report appears to be the only report wherein PartyGaming Inc. is alleged to have provided money laundering services and other subjects connected to it are alleged to have forfeited an additional $323 million.
As a matter of gaming law and policy, it is difficult to uphold the appearance of the preserve the integrity of gambling if an entity that, according to the FBI 2008 Report, provided money laundering services to organized crime, is allowed to enter that gambling market.
PartyGaming was indirectly mentioned in the suitability review of Caesars Entertainment Corporation by the Massachusetts Gaming Commission. In its investigative report, the MGC noted that pursuant to PartyGaming's 2009 Non-Prosecution Agreement with the U.S. government, it offered online gambling to players in the U.S and undertook U.S. payment processing arrangements that seem to have been designed to hide the nature of the transactions as gambling transactions, at a time when it's disclosure documents commented on the fact that U.S. regulatory authorities viewed its provision of gambling services to U.S. persons as illegal.
No doubt, the registration application of Bwin will be closely watched.