The legal action comes after Partygaming altered its systems

The legal action follows Partygaming's move to separate its online poker system from that of its "skins".

Skin sites such as Empire directed users to online poker operators, such as to Partygaming's Party Poker site, and were paid commission for doing so.

Partygaming said it remained "highly confident" of any legal outcome.

'Confidential arbitration'

Empire has lost more than half its market value since it floated in June.

"The company seeks substantial damages and injunctive relief from Partygaming," Empire said on Tuesday.

It also said it was holding "confidential arbitration proceedings" with a Partygaming subsidiary.

However, a Partygaming spokesman said the legal action by Empire could be considered as the first "pantomime" of the season.

"We remain highly confident of a successful outcome to the litigation with Empire," they added.

Takeover attempts

After the Partygaming decision on skins, online players using the Empire link were confined to the smaller poker site with fewer players.

In October, Empire, founded by Israeli entrepreneur Noam Lanir, warned that profits would be 10% below expectations.

In November, it threatened to sue Partygaming "in relation 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'".