Bwin.Party Digital, the major UK online casino firm that was created by the merger of Bwin Interactive and PartyGaming in March, 2011, has announced that it has terminated its advertising contract with the recently indicted Megaupload.com.

The termination follows the arrest of the founder of Megaupload.com known as Kim Dotcom, formerly Kim Schmitz, also known as Kim Tim Jim Vestor as well as Kimbie. Kim was arrested along with four others recently and is presently in police custody in New Zealand on suspicion of being involved in money laundering and copyright infringement related to pirated music, films and TV programs via his Meaupload.com website.

Bwin.Party Digital and its poker arm Party Poker have been named in the indictment under “Third Parties” after paying in excess of $3 million for advertising the sites on the Megaupload site. The contract for the advertisements commenced in November 2009 before its merger with Bwin and was still in force on or about March 18, 2011.

John Shepherd, Bwin.Party’s company director of communications reported that as soon as the news broke out about Megaupload.com the company immediately terminated the contract. Shepherd added that they did not have any knowledge whatsoever about any of Megaupload’s alleged activities.