Billionaire Internet Gambling Mogul to Settle With US Department of Justice

December 17, 2008 08:53 AM
by Isabel Cowles
Anurag Dikshit of PartyGaming, a U.K.-based online gambling company, will pay U.S. authorities $300 million for violating the 1961 Federal Wire Act.

Billionaire Seeks Settlement for Illegal Gambling

One of the biggest winners in online gambling is about to take a big loss.

Anurag Dikshit, a cofounder and biggest shareholder of PartyGaming, a U.K.-based online gambling company, has agreed to pay $300 million out of pocket for violating U.S. laws that make it illegal for anyone to transmit gambling information through wire communication facilities, which today includes the Internet.

Mr. Dikshit could face up to two years in jail, though he hopes his cooperation will prevent authorities from taking such measures, the Financial Times explains. In contrast, Ruth Parasol and Russ DeLeon, two other PartyGaming cofounders, have avoided negotiating with the U.S. Department of Justice.

Many online gambling companies have been forced to cease doing business in the U.S. with the past few years because of increased restrictions on Internet gambling.
U.K. publication Management suggests that the DoJ’s recent emphasis on shutting down online gambling may reflect a desire to resolve the issue before January 20; the incoming Presidential administration is likely to focus instead on more pressing national concerns.

Key Player: Anurag Dikshit

Anurag Dikshit wrote the software for PartyGaming when he was 25 years old. To skirt American restrictions against online gambling, Dikshit and site cofounder Ruth Parasol based the company outside the country. According to The Guardian, Parasol ensured Dikshit’s loyalty to PartyGaming by rewarding him with a substantial percentage of the company’s shares, the source of his considerable fortune.

In 2008, Forbes magazine named Dikshit as the 743rd richest person in the world.

Background: Scrambling to stop online gambling

A measure to crack down on Internet gambling was passed by the House in 2006, but it failed to become law. The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), was intended to effectively eliminate most of online gambling by going after Internet service providers, banks and credit card companies that processed payments to internationally based betting sites.

Last month, President Bush pushed to make UIGEA become law, hoping to get the measure through before the next administration could stop its approval. According to a press release issued by the Safe and Secure Internet Gambling Initiative, an organization that supports the legalization of online gambling, the act is flawed and confusing. The release refers to a report issued by the Center for Regulatory Effectiveness that says the act leaves U.S. financial service companies to “interpret ambiguous State and Federal gambling laws, which do not clearly differentiate between legal and illegal Internet gambling activities or transactions.”

Reference: Federal Wire Act

The text of the 1961 Federal Wire Act is available through the U.S. House of Representatives Web site.

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