PartyPoker + Everest merger ?

Rumors have it that PartyGaming is possibly interested in purchasing GigaMedia Limited in doing so the merger would substantially increase PartyGaming’s market share should the two well established online gaming firms merge into one large corporation, the traffic levels generated are expected to rival those of the current number two Full Tilt Poker in terms of busiest poker room online.

PartyGaming are best known for once being the world’s most populated online poker room with their PartyPoker software which dominated the market until the introduction of the UIGEA which forced them to stop accepting USA players due to them being a listed company on the London Stock Exchange (LSE), this lead them into dropping to their current position of fourth busiest online poker network. PartyCasino another of PartyGaming’s subsidiaries is the current title holder of the most populated online casino venue.

GigaMedia (NASDAQ: GIGM) currently own EverestPoker which currently ranked sixth in poker network popularity boasting an estimated $360 million market value with profits of approximately $12 million last year.

EverestPoker recently purchased the rights to be the exclusive table sponsor of the WSOP in a multiyear deal drafted in 2008, whereas previously PartyPoker was the official World Series of Poker sponsor right up until 2007.

The buzz is that GigaMedia Limited have attained the services of Goldman Sachs the investment banking firm in order to find a buyer for the company. In March it was reported that GigaMedia had told investors that they were “in discussions with several interested parties concerning the possibility of a strategic-merger or a sale.”

PartyGaming have remained tight lipped regarding any possibility of a takeover yet they are looking to expand their operation as a spokesperson for the Gibraltar based company said “We have made it very clear we believe the industry will consolidate and we will-look at opportunities as and when they arise.” many in the industry believe the merger is on the top of PartyGaming’s list of possible acquisitions.

PartyGaming have recently placed themselves in good stead with the United States government with their recent settlement of a legal dispute for providing online gambling facilities to Americans players before implementation of the Unlawful Internet Gambling Enforcement Act of 2006 had begun. PartyGaming settled the lawsuit by agreeing to a $105 million admission of guilt to the US Department of Justice with the condition that they could not be prosecuted for the violations they had allegedly accrued.

It is clear that PartyGaming are looking ahead into getting back into the main stream of the US online poker industry in the future by keeping themselves clear of any wrongdoings they will stand a greater chance to obtain a license to operate a poker network legally and regain their former popularity in the USA when the UIEGA is overturned and new online poker legislation is passed in the USA, bearing in mind that on the 6th May 2009, Congressman Barney Frank unveiled the Internet Gambling Regulation Consumer Protection and Enforcement Act, which proposes a comprehensive licensing and regulatory structure for the online poker industry in the United States it also included legislation to delay the currently implemented (UIGEA) Unlawful Internet Gambling Enforcement Act by a year.

So the question is not if the USA will allow online poker but rather when will online poker be legal in the United States of America given that the US government is desperately sourcing any form of income they can, online poker taxation potential is estimated at over 50 billion dollars over the next ten years and in my view PartyPoker has a great chance of being licensed and returning to their former glory as the #1 online poker site worldwide within the next one to two years.

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