Legal worries cloud PartyGaming poker float

Legal worries cloud PartyGaming poker float By Steve Slater For Reuters.co.uk PartyGaming shares were under pressure in unofficial trading on Thursday amid investor concern about the regulatory risk facing the online poker giant, which is set for a multibillion-dollar share float later this month. Spread-betting company IG Index said its price range for PartyGaming's shares had slipped to 110-118 pence, while Cantor Index's price was 112-115p, both towards the lower end of PartyGaming's indicated price range of 111-127p per share. The weakness came a day after the company issued its prospectus which said the company's directors risk jail if U.S. moves to clamp down on online gaming are successful. "There is a significant risk that criminal or civil judgements may be sought against the group of directors," PartyGaming said in its prospectus for the initial public offering in London. "If successful, such actions may result in remedies such as injunctions ... fines and imprisonment." PartyGaming said 87 percent of its players are based in the United States, where the legality of online gaming is a grey area. The Gibraltar-based company does not have a physical presence in the United States, but it does advertise and receive funds from payment processors there. U.S. LEGAL ISSUE It said any disruption to its relationships with partners such as banks, credit-card companies or payment processors could affect its business, and said as payment processing has become more tightly controlled it had experienced "some difficulties" in processing payments to and from its customers. "Accordingly, payment processing costs and bad debts may increase as a proportion of the group's revenues in the future, and the group may experience increasing difficulties in advertising," it said in the section of the prospectus dealing with risk factors. One legal expert said the high-profile flotation was likely to bring the legal issue in the United States to a head. Continued ...