According to media reports, gambling company Party Gaming plc has entered into discussions this week with the US Department of Justice. The purpose to clarify the firm's position prior to October 2006. After this time, financial transactions to online gambling companies were declared illegal under the Unlawful Internet Gambling Enforcement Act (UIGEA).

As a result, Party Gaming was forced to leave the US market and has experienced significant financial loss. Speculation has now arisen that Party Gaming's intentions may be to come clean on its American activities prior October 2006. This would have the potential to open the doors for further business initiatives in the US.

Julian Easthope, a London analyst with UBS AG, told media that the news may have a positive impact on Party Gaming shares. "If Party Gaming can positively resolve this it will be good news for the share price, because anxiety about legal issues has been holding up potential merger and acquisition activity,'' he said  He also added that new lenders have expressed concern about future legal implications and costs relating to Party Gaming's gambling activity in the US.

Party Gaming has issued a statement advising that the discussions are to resolve “...some uncertainty as to what actions, if any, U.S. law enforcement agencies may take against'' Internet gaming companies.

Last year, several of the gambling industry's top executive were arrested for illegal activity in the wake of the UIGEA. Betonsports' David Carruthers and Peter Dicks of Sportingbet plc featured in prominent cases, however Dicks' case has recently been dropped by the state of Louisiana.

Party Gaming shares have recovered 37 percent in the past six months. Their value was almost halved on the trading day immediately after the UIEGA was implemented, resulting in a loss of over three quarters of the company's revenue.

Since then, discussions about a possible acquisition of Party Gaming by main rival 888 have been called off. Insiders to the talks say the main reason for the dissolution was concern about potential legal risks.

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