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Playtech parties on, hooks up with the Chinese Communist Youth League

Party off for Partygaming

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Leading gaming software provider Playtech announced in a press release that it has signed an agreement with Hong Kong-based Foundation Group Ltd. to provide P2P gaming software to the Chinese Communist Youth League (CYL). The CYL has apparently been given responsibility for implementing a “Green Internet Policy” in China, though whether the green refers to environmentally sustainable gaming or American-style greenbacks remains unclear.

The software will let internet cafes around the mainland provide officially licensed P2P tournament games with cash prizes.

With the recent crackdown on internet cafes in China, Playtech appears to have jumped into bed with the right group. Coming on the heels of its 2006 earnings report sent out last week, in which Playtech trumpeted 89 per cent year-on-year growth in revenues and 90 per cent growth in adjusted net profit compared to 2005, the party just seems to keep going for the gambling-oriented software company. Playtech already has a licensing agreement signed with China’s largest corporate retail gaming network, Sino Strategic International, and this deal can only strengthen Playtech’s hand against its rivals in a market where political connections can make or break you.

Poker makes for strange bedfellows

Alfonse D’Amato, the former socially conservative Senator from New York, has emerged as the spokesperson for the Poker Players Alliance, a political group organized to fight anti-gambling legislation in the United States.

It looks like he’ll be wooing some new friends up on the Hill.

Liberal Congressman Barney Frank, openly gay and from Massachusetts, of all places, has become the most prominent member of Congress yet to criticize the controversial Unlawful Internet Gambling Enforcement Act, which went into effect last year after some late night maneuvering by social conservatives in Congress.

Frank, a libertarian on these kinds of social issues, has come out in support of a liberalized approach toward online gambling, favoring regulation over prohibition.

Turkey in morality play

Turkey passed a law last week banning unlicensed internet gambling, and explicitly prohibiting companies from targeting Turkish players.

Austria-based Bwin, which has had its own troubles in Germany and France, is the only big player concerned about the legislation, since last year it derived approximately 6 per cent of its revenue from Turkey. Bwin asserted that sometime in the vaguely distant future it plans to wade through the morass to get an actual license to provide services, and market itself in Turkey. Bwin has shut down its Turkish language site.

No word from Turkey on just when those licenses would be available.

In other news from Bwin, the company confirmed in a statement that it is in preliminary negotiations to acquire Sportingbet. That, combined with recent good news from the European Court of Justice in the Placanica case, has sent the online gaming stocks into a rare upward spiral.

France beats different drummer, marches on

The French have summoned executives from up to 20 different online gambling companies in for questioning on March 13, according to a variety of reports last week. Those “invited” to attend include the former CEO of 888, John Anderson.

Although nobody apparently is going to be formally charged with anything, the move seems quixotic in light of the fact that the European Court of Justice yesterday chastised Italy for squeezing foreign operators out of the Italian market. Of course, France made waves back in September when it arrested the co-CEOs of Bwin in Monaco, where they had traveled to announce the sponsorship of a local football club.

888 cancelled its own deal with the Toulouse football club back in December after France prohibited online gaming companies from sponsoring French sports teams.

Partygaming 2006 results droop, as UIEGA hangover sets in

The official results (PDF) for online gambling giant Partygaming are in, and after tax profits fell 56 per cent in 2006 from $293.2m in 2005 to $128.4m, primarily due to its hasty exit from the lucrative American market, which had provided over three quarters of its revenue.

Prior to the passage of the UIGEA, the company had a dominant position in the online poker market. The UIGEA also resulted in $250m in restructuring costs, as the company refocused its energies on Europe and emerging markets in Asia and elsewhere.

In other bad news for the onetime industry leader, Partygaming recently announced that it would no longer accept French business after complaints by French authorities led to hand-wringing in the boardroom. In perhaps unrelated news, CEO Mitch Garber dumped 3,333,300 shares of Partygaming stock at 33 pence per share, while exercising options for another 3,749,999 shares at .0015 pence per share - basically free.

That’s my kind of buy-in. ®

Burke Hansen, attorney at large, heads a San Francisco law office

Security and trust: The backbone of doing business over the internet

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