Inflammatory Barrons article

[2Tone]

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The article claims that Party mixes corporate and player funds. Curious, I went to Party’s site, and couldn’t find any specific wording that indicates otherwise. (Stars specifically says that they do no such thing, right there on their home page)

Juicy parts of the article below. If this is true, it is deeply troubling.

MORE TROUBLE COULD LIE ahead for PartyGaming. Gamblers anxious to clear out their accounts could cause a run on the bank. For according to the company's June 30, 2006, balance sheet, PartyGaming owes its clients $192.6 million in liabilities and prize pools, while having only $132.9 million in cash and cash equivalents to meet that obligation. And those cash holdings are likely to have fallen sharply, because of $130.5 million of cash spent on an acquisition in August.
The problem all this poses for gamblers is that, unlike the brokerage industry, customer accounts aren't segregated and insured. Your money and the house's money tend to be one.
Of course, the company could make good on its obligation with its retained earnings and shareholders equity, if there were any. But unfortunately the company has a negative tangible net worth of minus $53 million. And after what happened in Washington, one can bet that its servers and other physical assets are no longer worth the $58.3 million shown on the balance sheet. Nor are its goodwill and other intangible assets likely worth anywhere near their $144.4 million balance-sheet value. Not when the business has just gone up in smoke.
PartyGaming offers a sad tableau. Investors have already lost a ton. Its players may have their money frozen, or never get all of it back. There are no winners in this sordid tale, except Parasol and the other insiders. You don't beat the house.