Empire Online and PartyGaming take it to the courts

Empire Online announced this week it has launched a claim of several hundred million pounds against PartyGaming Plc. in the Gibraltar High Court for breach of contract. "The company seeks substantial damages and injunctive relief from PartyGaming," Empire said.

Earlier this month, Empire announced it was pursuing legal action against PartyGaming due to "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."

In addition, Empire is now alleging PartyGaming initiated a marketing campaign against Empire's most loyal customers following the split.

In early October, PartyGaming transferred players from its PartyPoker.com site 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.

Immediately following the split, Empire Online began to experience a downward slide: It lost a chunk of its player base to PartyGaming, and twice issued warnings to investors that 2005 profits will be lower than previously anticipated.

PartyGaming said it was confident of a "highly successful outcome" to the legal battle, but did not rule out an out-of-court settlement.

The proceedings are expected to be intense. Since Empire's initial announcement, information has surfaced indicating the company was warned in advance of the gaming giant's intention to separate its poker players but chose to keep investors in the dark.

According to a November 27 article in the UK newspaper, Sunday Times, former PartyGaming skin Empire Online received a letter dated May 4 stating 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 Empire was not aware of any intention on the part of PartyGaming to discontinue the companies' partnership agreement. It is not known how this information will affect the upcoming legal proceedings.

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