The agreement between Party Gaming Co-Founder Anurag Dikshit and the United States Government pervaded news headlines in mid December. The owner of 27% of the company that manages popular online poker room PartyPoker, Dikshit agreed to pay the Federal Government a total of $300 million in three installments. Major news outlets have reported that $100 million has been turned over so far. The news, which sent Party Gaming’s stock soaring, prompted an entirely different reaction from major industry organizations like the Remote Gaming Association (RGA) and Poker Players Alliance (PPA).

Dikshit admitted to violations of the Wire Act of 1961. Even though the Act has been typically applied only to online wagering on sports, the case in the District Court of Southern New York specifically mentions that Dikshit was engaged in offering online poker to Americans. Even though many mainstream news outlets have claimed that a harmful precedent may be set in the process, the PPA disagrees. A press release distributed by the organization commented, “To be clear, as a private settlement between two parties, this plea does not change existing law in the United States nor does it establish any kind of precedent moving forward.”

The PPA also claims that in a previous ruling, the Fifth Circuit Court of Appeals noted that the Wire Act only applies to sporting events. Nevertheless, Dikshit’s admission of guilt may help clear the air for Party Gaming, as the company may now be able to enter into business agreements outside U.S. borders without having a legal cloud swirling over its head. Citing contradicting state and federal laws, including the Wire Act and Unlawful Internet Gambling Enforcement Act (UIGEA), the PPA demanded, “We hope legislators in the upcoming Congress will take note of this disparity and pass legislation that affirms poker’s legal status and responsibly regulates the online poker industry.”

In response to the settlement with the largest single shareholder of Party Gaming, Congressman Robert Wexler (D-FL) took the opportunity to address the ongoing struggle between the U.S. and European Union over the UIGEA. The RGA has led the charge on that front, arguing that the U.S. is unfairly discriminating against regulated foreign internet gambling operators while allowing domestic and rogue operators to thrive. Wexler commented, “It is of critical importance that we find an effective and immediate way to regulate and tax internet gaming in order to avoid a serious trade dispute with the E.U., which, in turn, could have global trade repercussions for the United States.” Due to its stance on internet gambling, the U.S. has forged settlements with Antigua, the E.U., and others. Affected industries have included international shipping as well as proprietary software.

Unlike the PPA, however, which is focused on the American poker playing audience, the RGA is concerned about the potential precedent set by Dikshit’s $300 million agreement. In addition, he may receive up to two years’ worth of face jail time at a sentencing hearing scheduled for 2010. The RGA explained, “U.S. authorities, it seems, have succeeded in pressuring a major shareholder into making a deal. A major line has been crossed and it could set a very worrying precedent.”

The RGA is a trade organization composed of many European-based internet gambling firms. Its roster includes Party Gaming, 888, Sportingbet, Ladbrokes, and William Hill, all of which are publicly traded on the London Stock Exchange. In deference to shareholders, PartyPoker was one of the first sites to depart the U.S. market in 2006 after the passage of the UIGEA. On the behalf of Party Gaming and its other members, the RGA filed a complaint with the European Commission alleging a violation of World Trade Organization practices by the United States. In March, the European Commission began its investigation.

According to the Financial Times, Dikshit’s sentencing hearing won’t take place for two years in order to “give sufficient time for him to demonstrate he was co-operating with the DoJ.” Party Gaming announced to the London Stock Exchange that it was also seeking its own accord with the U.S. Government separate from that reached by Dikshit. Ruth Parasol and Russ DeLeon, who each own 14% of Party Gaming, have not yet indicated whether they plan to make similar agreements.

Congressman Barney Frank (D-MA), who will return to Capitol Hill in 2009, introduced the Internet Gambling Regulation and Enforcement Act, which would have created a complete licensing and regulatory framework for the entire industry. However, the bill, HR 2140, was not acted upon during the current Congress and must now be reintroduced in the New Year. President-elect Barack Obama will be sworn in on January 19th, 2009. The Senate is scheduled to convene on January 6th.