Billionaire Anurag Dikshit, one of the founders of PartyGaming, has reportedly settled with the United States Department of Justice in connection with investigations being carried out for violation of the Wire Act in the pre-UIGEA period.
Anurag Dikshit has agreed to pay a fine of $300 million (despite reports being much lower) and could face a two-year prison term even after his voluntary settlement. The objective of the settlement appears to be to avoid future prosecution. Dikshit was not indicted or charged with any offense. He is PartyGaming’s largest single shareholder with a 27% interest in the company.
Two other billionaire founders of PartyGaming are the husband wife team of Ruth Parasol and Russ DeLeon, each of who holds a 13% stake in the company. Some reports state that they too are negotiating a settlement along the same lines as Dikshit. Other reports say that they are not in contact with the Department of Justice officials. Ruth and her father made a fortune in online pornography and telephone sex before venturing into online gambling.
This settlement is bound to send shivers down the spines of owners of other online gambling establishments who have operated in the United States in the same period. Calvin Ayre, the founder of Bodog, is already under investigation and is absconding. Next in line could be high profile names like William Hill and Victor Chandler.
Though Dikshit (pictured to right) hails from India he has lived out the American Dream. Dikshit graduated in computer science in 1994 from the Indian Institute of Technology, an engineering university of wor
ld renown. Following graduation, Dikshit worked in the United States for organizations like CMC, Websci and AT&T. It was then that he met the Parasols and the rest as they say is history.
PartyGaming survived the dot-com crash and when the founders sold part of their privately owned stakes to the public on the London Stock Exchange in 2005 each one of them became billionaires. Dikshit’s worth is estimated at $1.75 billion. He is the 207th richest man in the world, the 35th richest Indian in the world and the richest man in Gibraltar.
The Wire Act of 1961 has been as contentious as the UIGEA. Opinion is divided whether online poker is covered by the act or not. Legal analysts have opined that it covers only sports betting. Of late the Poker Players Alliance has been propagating the view that poker is a game of skill and not of chance and therefore not covered either by the Wire Act or the UIGEA.
But Dikshit and the other founders of PartyGaming knew they were on thin ground. So while they stated the above arguments in the offering documents before the public listing they also hedged their bets. The documents stated, “In many countries, including the United States, the group’s activities are considered to be illegal by the relevant authorities. PartyGaming and its directors rely on the apparent unwillingness or inability of regulators generally to bring actions against businesses with no physical presence in the country concerned.” Wishful thinking one can say in hindsight.
PartyGaming executives are expected to make a formal announcement anytime.
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