PartyGaming Co-founders Ruth Parasol, Russell DeLeon to Divest Holdings, Avoid New Jersey Licensing

bwin-party-logoInteresting business news from the New Jersey online poker scene today, where PartyGaming co-founders and current significant shareholders Ruth Parasol DeLeon and James Russell DeLeon have both agreed to divest their holdings, in order to avoid regulatory scrutiny by New Jersey regulators in connection with’s application to be licensed to provide online gambling in New Jersey.

Most non-tribal casino regulatory regimes in the United States require vetting not only of the corporate entities seeking licensing, but of key employees and significant shareholders as well, a historic nod to the organized-crime creation of the Nevada gambling scene more than half a century ago.  New Jersey is among the state’s that sets an ownership threshold — believed to be 5% — at which point individual ownership licensing is also required.  The DeLeons, once married but now divorced, each own 7.16% of, according to a release issued by a few hours ago.

Here’s the meat of the release, which also includes the actual share counts and the names of the trusts in which the shares where held on behalf of the DeLeons:

Substantial Shareholders’ Divestiture Arrangements Pursuant To New Jersey Licence Application

On 29 July 2013, applied to the New Jersey Division of Gaming Enforcement (‘DGE’) for a Casino Service Industry Enterprise Licence (the ‘Licence’). As part of the application process, certain substantial shareholders of are required to submit individual Licence applications to the DGE or otherwise dispose of their shareholdings. As a result, certain substantial shareholders of have elected, subject to the conditions summarised below, to place their shares into divestiture trusts, through which their shares will be divested over a period of up to 36 months in one or more transactions at times to be determined.

Divestiture Arrangements
Emerald Bay Limited (‘Emerald’), wholly-owned by Ruth Parasol DeLeon, and Stinson Ridge Limited (‘Stinson’), wholly-owned by James Russell DeLeon (together, the ‘Substantial Shareholders’) have elected, pursuant to a divorce settlement and for reasons of privacy, to enter into a divestiture agreement with and the DGE (the ‘Divestiture Agreement’), rather than submit individual Licence applications. Emerald currently owns 58,498,667 (7.16%) shares and Stinson currently owns 58,498,666 (7.16%) shares. Under the terms of the Divestiture Agreement, the Substantial Shareholders have respectively agreed, subject to the conditions described below, to transfer their entire holding of shares into separate trusts, and such shares will thereafter be divested by the trustees of their respective trusts, working together, in one or more transactions.

The release goes on from there to clarify that will need to receive a conditional waiver from New Jersey regulators to do business in the state until the divestiture is complete, a process which may take up to two years. has already signed on as a software partner to the Borgata, the prominent Atlantic City casino co-owned by Boyd Gaming and MGM, which a few weeks ago received New Jersey’s first interactive license.

Today’s news clarifies that the skeletons in’s corporate closet are still rattling around, causing difficulty with US-based regulators.  Ruth Parasol and Russell DeLeon were natives of Sacramento, California, who headed one of the first known online-gambling sites, the Starluck Online Casino, which was soon rebranded as PartyPoker.  The DeLeons, who married in 2003 and separated in 2010, hired Indian programmer Anurag Dikshit to head up the PartyPoker software development, as well as hiring Mike Sexton as a poker game advisor and leading spokesperson for the brand.

All was well for Party for the first half of last decade, when the site became the world’s largest, making hundreds of millions of dollars for its primary founders and owners.  However, the 2006 UIGEA sent the firm’s fortunes into steep decline, since it was incorporated in the United Kingdom and was forced to quickly exit the US market.  Party was one of the very first site’s to jump from a poker-only stance into online gambling ventures which were more clearly illegal under US law, including PartyCasino and PartyMarkets (an online wagering outlet dealing with stocks, commodities, elections, and so on).

Above all other sites, the billions taken from the US economy by the site in its heyday put it into the sights of the DOJ, which eventually negotiated settlements with both PartyGaming as a corporation and with Indian programmer Dikshit for the site’s years of US-facing activity.  However, both of the DeLeons expatriated from the US to avoid prosecution and/or a forced settlement, and botyh have lived in Gibraltar (where is now located) and elsewhere in recent years.

It is also known that the DOJ reached out to each of the DeLeons in an attempt to extract a settlement, probably on the order of the $300 million Dikshit agreed to pay in 2008.  (It is unknown if a similar settlement attempt was ever made with Mike Sexton, who has also been alleged to be a Party shareholder.)

That both of the DeLeons rebuffed the DOJ’s efforts, and continued to live offshore while retaining an ownership interest in, is a situation that New Jersey regulators apparently felt they could not overlook.  Similar concerns have plagued’s attempts to be licensed in Nevada, where one well-connected insider there called the effort “dead on arrival.” is the latest iteration of the company, formed when PartyGaming merged with UK sportsbetting giant Bwin Gaming in 2011.

Given the late, late announcement of the divestiture, less than four weeks before the scheduled Nov. 26th live date for New Jersey online gambling, it’s quite likely that there’s more to the story, and that the DeLeons were ousted under legal duress.  Will the public ever know that one for sure?  Possibly not, but the end result is the same: Ruth Parasol DeLeon and Russell DeLeon were always going to have to depart before US regulators took a application seriously.  In a way it’s surprising that today’s developments took so long to occur.


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