It was confirmed earlier this week that Ladbrokes and 888 have entered into preliminary talks in a potential takeover deal. While spokesmen for the online gambling group 888 and the UK’s biggest bookmaker, Ladbrokes confirmed that talks were being held, they refused to add to their comments.

Gambling analysts are now wondering if the US threat could be the stumbling block in the advancement of these talks. Four years ago, Ladbrokes made a bid to purchase 888 and talks advanced until the US Department of Justice started investigating gambling companies – 888 included – over their involvement in the US gambling market. Ladbrokes therefore balked in those talks, fearing retrospective legal action and huge payouts that it might need to make in order to settle 888’s potential fines in the US.

While other big gambling groups such as Sportingbet and Party Gaming have settled with the DOJ (in the millions of dollars, it should be added), 888 has still not done so and therefore does not enjoy immunity from prosecution just yet.

According to one industry specialist: “This may be a barrier to a bid”.

Another said: “The deal does make sense from Ladbrokes’ viewpoint because the 888 platforms are good. It would be a case of Ladbrokes gaining proven technology. But the financial difficulty is what does Ladbrokes value the 888 shares at as the company has not yet settled with the Department of Justice? It is an overhang on a deal that probably makes quite a bit of sense.”

Another analyst, Simon Davies, went so far as to call a potential non-prosecution agreement with the US DOJ as a “poison pill” to the deal.

Nonetheless, news of this ‘threat’ is nothing new to Ladbrokes, which has gone down this path before, and it simply remains to be seen how the two sides will get around this issue in their ongoing talks.

As the US struggles to formulate its own gambling laws on a state and federal level, Cyprus has decided to make a more clear-cut decision and ban online gambling by the end of this year.

The current laws in Cyprus rule that no form of land gambling is allowed, which means that many of the island-state’s inhabitants take their entertainment online. It is thought that around EUR 2.5 billion is wagered each year by Cypriots.

The government has stated that a rise in crime, especially relating to gambling, is behind the country’s move to ban online wagering altogether.

“The police have repeatedly underlined – publicly in fact – that online gambling is the originating cause of many crimes – whether these involve loan sharking, or threats, or blackmail or even taking people hostage illegally,” said a spokesman for Cyprus’ police, Michalis Katsounotos. “We have pointed out these dangers in various memos that have been submitted to the relevant authorities.”

The Attorney General of Cyprus, Petros Clerides said that it is the “public’s interest” to ban roulette, poker and slot machines. “It is intended to combat criminality and to protect the consumer,” he justified.

Being a member of the European Union, Cyprus may have a problem with imposing the ban as it goes against treaties of free market across borders signed between states. However, Cyprus has a precedent case in its favor – that of Portugal, which challenged the EU’s rules pertaining to online gambling in 1999 – and won.