PartyPoker.com owner, PartyGaming Plc., can laugh off former partner Empire Online's legal intentions according to a Sunday Times article that revealed Empire was warned in advance of the gaming giant's intention to separate its poker players but chose to keep investors in the dark.
The UK newspaper said in a November 27 article that former PartyGaming skin Empire Online received a letter dated May 4 indicating its close relationship with the gaming giant might be changed, "but did not tell investors about the letter in the prospectus for a float earlier this year." Empire apparently mentioned the possibility of such a move, but reassured investors it "will not materially affect the revenues of the group." It further stated that Empire was not aware of any intention on the part of PartyGaming to discontinue the companies' partnership agreement.
In early October, PartyGaming transferred PartyPoker.com players to a new operating platform, one that separates players who enter from third party sites such as Empire Poker, Empire Online's poker room, from those who enter through PartyPoker.com directly. Empire Online has since experienced a downward slide, having lost a chunk of its player base to PartyGaming and twice issued warnings to investors that 2005 profits will be lower than previously anticipated. Most recently, its shares slid to 69.5 pence, down from an initial float price of 175 pence.
Subsequent to implementing its new platform, PartyGaming announced its intention to acquire Empire and the two firms entered takeover negotiations. However, when the talks collapsed earlier this month, Empire announced it was pursuing legal action against PartyGaming because of the "damage caused to it by the conduct of companies within the PartyGaming group in separating the poker system used by PartyGaming players from that of its skins."