Purple Lounge Casino row escalates

For several weeks players have been complaining about slow-pay and bad communications from the Purple Lounge online casino and poker room, a subsidiary of the UK-based Media Corp publishing group.

With complainants growing more vociferous this week, the company issued a business statement which filled in some of the gaps that players have not been able to obtain directly from the group.

The statement notes that it has become clear to the company that Purple Lounge has been underperforming, bringing about a situation in which “Media Corp has not received dividends or cash payments from Purple Lounge during its ownership and has loaned over GBP 900,000 in the last few months.”

This has created financial stress for the company, and “…the directors are in the process of considering a number of options for Purple Lounge as a means to control the losses and, in doing so, preserve the company’s cash and value in its other divisions.”

Management appears to be under the questionable impression that Purple Lounge’s troubles are the result of “…negative trade press (much of which the directors consider totally unfounded) particularly surrounding the litigation brought against one of the company’s subsidiaries by CD Casino.com Limited.”

It is more likely that poor service, slow payments and bad communications are the real cause for PL’s ailing condition, which might have triggered the departure from the board earlier this month of Chris Gorman, the man who is believed to be the original founder of the brand and who sold it to Media Corp.

The litigation referred to was first reported back in February this year and involves a company with one M. Caselli as sole director called CD Casino.com, which brought a more than GBP 300,000 action against a Media Corp company called Search Focus Limited .

Details of the dispute are sketchy, but Media Corp advised that it intended to “vigorously” oppose the suit.

For now, the Purple Lounge site, which is powered by Microgaming on the casino side and Entraction for the poker activity, remains suspended, frustrating players who have still not enjoyed the courtesy of a communication from the company, creating fears regarding the safety of their account balances.

Inevitably, questions are also being asked on whether Purple Lounge-Media Corp segregated player funds from operational spend; what its licensing jurisdiction – Gibraltar – is doing about the issue; how much of a future PL actually has; and why PL was taking deposits when it must have known its gambling subsidiary was in troubled financial waters.

Media Corp notes in its latest statement: “The options under consideration may be directly impacted by the outcome of the company’s stated intention of undertaking an acquisition or acquisitions.”

This refers to an earlier advisory that it was talking to a company called Gaming Media Group Limited regarding a reverse takeover.

Perhaps there is some comfort for players in the claim by Media Corp that as at March 31 this year it had cash balances of GBP 400,000 with an additional GBP 250,000 received on 4th April 2012 from the disposal of “loss making publishing assets.”

In the meantime, players are likely to be very wary around Purple Lounge, even if it is reinstated on the Web.