The New Jersey Division of Gaming Enforcement fined bwin.party $10,000 for violating the terms of a divestiture agreement that was a condition of its licensing in 2013. The fine was revealed during the New Jersey Division of Gaming Enforcement’s twice-monthly reports released on October 15.

bwin.party isn’t the first online operator the NJ DGE has fined. Caesars has been hit with multiple fines (here and here) for advertising to people on the exclusion list, and Resorts Casino has been fined for the same violation. It should be noted that brick and mortar casinos are routinely fined for all manner of violations, although this is the first fine that wasn’t a product of the gaming regulations put in place, and is a bit more nuanced.

The bwin.party fine explained

The best place to start is back in 2013, when online operators were submitting licensing applications to the New Jersey Division of Gaming Enforcement. This is a long and tedious process that requires the DGE to conduct extremely invasive background checks of any major shareholder of a public company. This was something several shareholders of bwin.party didn’t want to go through, so PartyGaming founder Ruth Parasol and her ex-husband Russell DeLeon chose to divest themselves of their equal ownership shares of bwin.party.

According to a press release at the time by bwin.party, the divestment agreement between the DGE called for Ruth Parasol DeLeon (Emerald Bay Limited) and James Russell DeLeon (Stinson Ridge Limited) to fully divest themselves within 24 months. As noted, Ruth Parasol founded PartyGaming in 1997 and later married Russell DeLeon. Following a divorce settlement, the two owned equal 7.16 percent shares of bwin.party. Because of the amount of shares involved, the DGE gave the pair 24 months to fully divest themselves.

The divestment began in March of 2014, when activist investor Jason Ader purchased just over 6 percent of the DeLeons’ shares (some 51 million shares), but the remainder of their shares have yet to be sold off, which led to the DGE fine.

Why haven’t the remainder of the shares been sold?

Any stakeholder with 5 percent or more ownership has the right to nominate a board member, and as bwin.party learned with Ader, this can be a messy process. Ader nominated not one, but four people for the board – he eventually got one person on the board, which led to a public tussle. Ader has also been critical of the company’s Chairman of the Board Phillip Yea and  blew up the sale of bwin.party to 888 Holdings in order to continue to broker a better deal with GVC Holdings.

Considering GVC eventually bought bwin.party for well over $1 billion, a $10,000 fine to keep a second activist investor out of the mix doesn’t seem like a bad price to pay, if that is in fact why Parasol and DeLeon haven’t fully divested themselves of bwin.party shares.

Steve Ruddock

About

Steve is a seasoned veteran of the online gambling industry, having written about it from every possible angle in his many years as a freelance gaming writer. Based in Massachusetts, Steve especially focuses on regulatory and legislative news coverage pertaining to the U.S. market.