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Sportingbet to Forfeit $33M in Settlement With U.S.

By Jason Beahm on September 22, 2010 10:07 AM

Sportingbet has reached a settlement with U.S. prosecutors who have agreed not to prosecute the company in exchange for the company forfeiting $33 million. The company had been accused of illegally using payment processing tactics that hid the nature of their clients transactions from U.S. credit card companies. The companies had banned the use of their cards for such transactions.

The settlement immediately caused the gambling sites share prices to rise, up nearly 12% at the time this was written. Chief Executive Officer Andrew McIver believes that the settlement will make it easier for the company to get access to credit, acquire other companies and eventually enter into the U.S. market if online gambling is legalized, The Guardian reports.

Gambling companies are salivating at the growing opportunities as millions of Americans gamble online daily wagering nearly $100 billion annually, generating an estimated $5 billion in profits. Congress voted four years ago to ban financial institutions from handling gambling transactions and that decision is still on the books.

Sportingbet now joins PartyGaming as the only European gambling companies that have reached agreements in the US to avoid prosecution. Sportingbet decided to cooperate with the FBI as well as an continuing inquiry by U.S. Attorney's office. PartyGaming settled for $105 million in In April 2009.

Analyst Wayne Brown of Altium Securities believes that this makes Sportingbet a strong candidate as a take-over target. PartyGaming, who already merged with Bwin, seems to be the most likely company to buy Sportingbet. Brown also said that he sees online gambling as a growing area, as Europe and the US considers proposals to legalize and tax it.

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