Online Casino Operator PartyGaming Not Near U.S. Settlement
After a stock spike following rumors of a settlement between PartyGaming and the U.S. government, industry analysts have discounted the imminence of an agreement, causing PartyGaming stock to drop almost as rapidly as it climbed.
On May 30th, news broke that the online casino operator was prepared to pay a $1 billion fine to have all past violations of U.S. law forgiven. Even though the amount to be paid was enormous, investors saw the proposed deal as an indicator of clearer sailing and new oppotunities for PartyGaming, and the stock jumped 10% in one day.
However, Richard Carter of Numis Securities has downplayed the likelihood of a settlement, saying any agreement is still months away from being finalized. As a result, PartyGaming stock lost much of its gain, falling 7.5%.
The market value of the company fell to $2.2 billion. This may seem to make a $1 billion payment unworkable; but PartyGaming's owners received a $7 billion windfall when they took the company public, giving them a deep source of cash.
Investors would refer all possible legal action be resolved before putting money into PartyGaming; also, credit sources and new markets will open once the U.S. dispute is settled.
