Online Gambling Rules Face Long Odds

Tuesday, March 4, 2008

It’s not easy making rules for a U.S. law intended to deter illegal Internet gambling by choking off the flow of funds to offshore sites. That’s because no one seems to agree on what the law covers.

Officials at the Treasury Department and the Federal Reserve found that out after sifting through more than 200 comments from banks, gamblers, church groups and members of Congress on recommendations for the Unlawful Internet Gambling Enforcement Act of 2006. The basic sentiment was that their Oct. 4 proposal, which depends on financial institution enforcement, won’t work.

The outcome will affect 23 million online gamblers, some 2,500 Internet sites and the growth of an industry with an estimated $15 billion in annual global revenue. The law bars financial institutions from processing payments involving Internet gambling — with the notable exceptions of Indian gaming, state gaming and horse racing.

“If the federal agencies themselves cannot agree on the law, what hope is there that banks can resolve these confounding legal issues?” the American Bankers Association said in commenting on a conflict between the Treasury and Justice departments on the legality of betting on horses.

The Washington trade group said the suggested rules are more likely to catch its members in a compliance trap than stop profits from illegal gambling from escaping offshore.

The proposal says generally that it covers the making of bets on the Internet that already are illegal under state or federal law. It just doesn’t spell out those games of chance.

Banks and other financial institutions would have to make a reasonable effort to stop payments to Internet gambling sites through credit cards, checks or electronic funds transfer.

The final rule is overdue, as regulators review the flood of comments.

“This is an issue that there is so much interest in that we don’t want to rush,” said Jennifer Zuccarelli, a spokeswoman for the Treasury Department. “We are just trying to hear from everyone.”

There are a variety of complaints. Gamblers point to what they see as hypocrisy in the proposal. Why hamper Internet gambling, they argue, when states enthusiastically license casinos, and taking long odds on a state lottery ticket is perfectly legal?

Former senator Alfonse D’Amato, a New York Republican representing the Poker Players Alliance in Washington, told the agencies that its constituency should not even be included because poker is a game of skill, not chance.

“What is legal now?” Joseph Kelly, a professor of business law at the State University of New York College at Buffalo and an expert in online gambling, said in an interview. “God only knows.”

“If you operate in Antigua and take sports bets from the U.S., you are committing a felony,” he said. On the other hand, sports betting is allowed in Nevada and some other states.

The legal issue is crucial because of conflicting court decisions, differing state laws and applications of older federal laws. Prosecutors and the horse-racing industry have disagreed since 1978 on whether it’s legal to bet on horses across state lines. The law said it “is not intended to resolve any existing disagreements over the horseracing law.”

Then-Senate Majority Leader and presidential hopeful Bill Frist (R-Tenn.) pushed the bill through Congress just before it adjourned in 2006.

Almost immediately, big players in the industry such as PartyGaming in Gibraltar, which runs the PartyPoker.com and PartyBingo.com Web sites, pulled out of the U.S. market. They had been successful in blocking similar legislation for almost a decade.

“There was a pretty concerted lobbying effort to keep this from happening,” Susan Schneider, former head of the Interactive Gaming Council, a trade association in Vancouver, B.C., said in an interview.

Antigua, home to some big online gaming sites, objected through the World Trade Organization to the U.S. crackdown on Internet gambling. The WTO ruled in December that the United States must pay the island nation $21 million for violating trade rules.

The online gambling industry and its suppliers fear that the proposal to place the burden on legitimate payment operators will encourage gambling operators to set up fictitious accounts as a way around any rule.

Republican Sens. John E. Sununu (N.H.) and Pete V. Domenici (N.M.) asked regulators to come up with a list of restricted transactions.

Otherwise, they predicted, “Risk-averse financial institutions will simply choose to block every transaction” that could resemble gambling, “whether legal or not.”

Advocates of regulating, taxing and licensing Internet gambling — as some European countries have done — think the United States should appoint a federal commission to study those issues.

In the meantime, Frank Fahrenkopf Jr., president and chief executive of the American Gaming Association, said many privately owned offshore sites continue to let Americans wager, win and lose.

“Money is fungible, and it gets to where it wants to go,” Fahrenkopf said. “I don’t know of prohibition of anything that ever worked.”

Chris Ferguson Wins 2008 NBC Heads-Up Poker Championship

March 7, 2008

It definitely turned into a weekend of breakthrough performances by big name poker pros on the poker circuit. After Phil Ivey’s albatross-relieving win at the WPT LA Poker Classic that came after seven unsuccessful WPT final table appearances, Chris “Jesus” Ferguson took down the 2008 NBC National Heads-Up Poker Championship after finishing second two out of the three previous years.

To get the win, Ferguson had to play probably the toughest slate of any other competitior. He went up against John Juanda, Gavin Smith, Mike Matusow, Jonathan “FieryJustice” Little, Ivey and, finally, Andy Bloch for the championship match. Ferguson pockets $500,000 and exposure on a major network for the win.

At one point, when Ivey reached the final four, it looked like his hot streak was going to carry him to back-to-back wins just a couple of days after winning impressively at the LA Poker Classic. However, Ivey’s luck failed him against “Jesus,” who, much like Ivey did a few days before, seemed destined to win this event after coming so close before.

Proposed California Bill to Determine Online Poker Legality

Assemblyman Lloyd Levine, D-Van Nuys, has introduced a bill in California that will study the legality of intrastate online poker in California. The bill is designed to evaluate the potential for California to establish and regulate online poker within the state while still being within the legal bounds of the UIGEA. “Our understanding of the law is that so long as the player and server (hosting the online game) are in California, it would be legal,” said Levine. “But that’s what we are trying to find out.”

If bill AB2026 passes and an intrastate framework for online poker is deemed legal, it could open the door for not only California, but other states and Indian sovereignties as well. Whether potential California operators would come from B&M card room operators, the state itself, or existing online operators willing to set-up a California-only infrastructure is unknown. Levine cares less about the potential make-up of a resulting industry and more about the feasibility of the state to allow online poker within a legal and regulated framework. “It would be regulated,” said Levine. “We don’t know what the state’s piece will be, but it will be a regulated entity.”

The bill is being sponsored by a group called the Poker Players of America (PPOA). The PPOA’s website identifies the organization’s founders only as “experienced political professionals who also play poker.” The domain name’s web administer is listed as Nancy Todd, a political consultant and president of Nancy Todd, Inc., an international strategic consulting firm based in Las Vegas, Nevada.

While poker players across the state may be bolstered by this development, probably none so much as Anthony Sandstrom, a.k.a. Tuff Fish. Over the years, Sandstrom has single-handedly attempted to pass initiatives that would establish a legal framework for online poker in California. While Sandstrom is known for suffering brutal poker suckouts, prominently featured in his self-deprecatingly funny YouTube videos, he might finally see a winning hand when it comes to a regulated online poker industry in California.

Full Tilt and Other Gambling Properties the Target of DDoS Attacks

For the past couple of days, many online poker and casino properties have suffered outages. Full Tilt Poker was probably the most visible of these outages, as their web site was inaccessible for a couple of days. As of 5 am EST on Tuesday, their web site is redirecting to www2.fulltiltpoker.com.

It now appears that the reason for their outages over the past couple of days can be attributed to a DDoS (Distributed Denial of Service) attack.

According to Wikipedia, a DDoS attack involves “saturating the target (victim) machine with external communications requests, such that it cannot respond to legitimate traffic, or responds so slowly as to be rendered effectively unavailable.”

In this case, it appears as though Full Tilt’s servers and others in the industry have been saturated by “tons of bogus GET requests” (source link below).

According to the sourced article, the attacks started around February 10th and continued all the way up until February 18th.

There were a large list of targets, including:

Full Tilt Poker, Party Casino, Titan Poker, Virgin Games, CD Poker and Europa Casino. In addition, a number of Russian online gambling sites were targeted, including Pokerlistings.ru.

The extent of the outages for each site varied depending on the ferocity of the attacks and if they had any anti-DDoS attack measures in place. Full Tilt Poker is clearly still having issues while a number of the Russian web properties are still down. I am assuming that Full Tilt’s software outages over the past few days are related to these attacks as well. Full Tilt’s poker room has crashed numerous times over the past few days, including an embarrassing outage during the final table of the FTOPS main event.

The motive behind the attacks is still unknown. Was there an extortion attempt made? Will there be an extortion attempt made? Or is there some other reason behind the attacks?

Online Gambling Sites Linked to MOB?!?!?

February 8th, 2008

Offshore internet gambling played a vital role in supporting the criminal enterprises of the Gambino family, US officials said, in the latest evidence of the connections between the industry and organised crime.

An illegal sports gambling operation was based on at least four websites run in Costa Rica, as well as toll-free telephone numbers and a network of wire rooms, traditional bookies and debt collectors, according to the Queens district attorney.

Websites such as betallsports.com and betoffshore.net allegedly helped net “Gambino organised crime family gambling” operation almost $10m in wagers over two years.

The case is just one of a number of recent prosecutions that have connected the world of organised crime with online gambling.

“It’s a moneymaker for organised crime,” said Richard Brown, the Queens district attorney.

“Illegal gambling has always been the bread-and-butter moneymaker for organised crime because of the huge profits that it generates, which can be used to fund other more insidious forms of criminal activity, such as labour racketeering, drug trafficking, prostitution and…loan sharking.”

Twenty people were arrested over the alleged illegal gambling operation, as well as in relation to alleged prostitution and loan sharking crimes, on Thursday.

Nicholas Corrozzo, a 67-year-old Mafia “captain”, whose brother Joseph “Miserable” Corrozzo was the alleged consigliere to the Gambino family, ran the gambling business, according to Mr Brown.

Nicholas Corrozzo, also known as “The Little Guy” and “The Doctor”, is separately charged with ordering the double murder of Robert Arena “to settle a beef” and Thomas Maranga in 1996, by the US attorney for the eastern district of New York and is still on the run.

In 1976 he attended the wake of Carlo Gambino, the founder of the New York Mafia family, according to court documents.

Last year the Financial Times revealed that Betonsports, the publicly listed British online gambling company that went bust after being charged with illegal gambling and racketeering, had been linked by US prosecutors to a website that employed members of the Gambino family to collect debts.

The Bestlinesports.com website was one of a number of websites “belonging to or controlled by” Betonsports, according to an indictment from the US attorney in Missouri.

“There’s a connection between what’s happening online and organised crime,” said John Pistole, of the FBI. “La Cosa Nostra has business acumen: if there’s a way to make money without resorting to violence they will.”

Antigua Pushes for Advertising Approval in the UK

January 27, 2008

A high level delegation from Antigua and Barbuda is confident that the country’s application for “whitelisting” under the UK’s recent gambling legislation will be approved in the “very near future”.  Following a meeting yesterday with UK Minister for Sport Gerry Sutcliffe MP to discuss Antigua’s application to the gambling Commission, Antiguan Minister of Finance and the Economy Dr L. Errol Cort commented that “very little stands in the way” of a successful application for Antigua.

Remote gaming operators in jurisdictions attaining “whitelist” status are allowed to advertise their services to consumers in the United Kingdom.  Although a handful of applicants have been accepted for whitelisting, Antigua’s application has yet to be approved. Minister Cort and the other members of his delegation visited Minister Sutcliffe with the hope of moving the process along and ensuring that the Gambling Commission had all information necessary to complete its review and approve Antigua’s application.

“We are extremely encouraged by the reception we received from Minister Sutcliffe and his staff,” observed Minister Cort. “I was happy to learn that very little stands in the way of our approval for whitelisting, and I think I can express confidence that this issue will be resolved favourably in the very near future,” said Dr Cort.

“We are acknowledged global leaders in the regulation of this industry,” said Director of Gaming Ms Kaye McDonald. “Our standards are the highest in the world and we view the whitelisting as important to demonstrate our commitment to the highest standards in the supervision and oversight of this dynamic industry.”

Minister Cort concluded by stating that he considered the mission an unqualified success. “This meeting shows what governments can accomplish by working cooperatively and openly to resolve issues between them. We appreciate Minister Sutcliffe’s interest in this matter and look forward to concluding this matter shortly.”

The Antiguan delegation also included High Commissioner Dr. Carl Roberts, Deputy Administrator of the Financial Services Commission Trevor Mathurin, Director of Gaming Ms Kaye McDonald, gaming regulatory consultant Alan Pedley and legal advisor Mark Mendel. Minister Cort indicated that he had assembled the team in order to be able to address the specifics of any questions or concerns that Minister Sutcliffe may have had regarding Antigua’s regulatory efforts.

Antigua and Barbuda hosts the headquarters for entertainment giant, Bodog Entertainment Group.  If this tiny Caribbean nation makes the coveted UK Whitelist, it will only be a matter of time before Bodog begins their massive marketing campaign into the UK gambling market.

United Tote teams with Phantom Fiber to offer mobile wagering

Youbet.com’s (NASDAQ:UBET) United Tote subsidiary has signed a multi-year agreement with Phantom Fiber Corporation (OTCBB: PHFB) to deliver a mobile phone wagering solution that is fully integrated with the totalizator systems used by UT customers. The mobile service, which can be delivered on a wide variety of cellular phones, will let players view race programs, place wagers, manage their accounts and view historical transactions.
The two companies plan to demonstrate a prototype of the new service at the upcoming Symposium on Racing and Gaming being conducted December 3-8 in Tucson under the auspices of the University of Arizona’s Race Track Industry program. The product is expected to be deployed by the end of the first quarter of 2008.

United Tote will deliver the mobile service alongside its current suite of pari-mutuel wagering products, including its award winning EnterBet™ wagering software. Wagers through the new mobile platform will be merged with host tote systems and subject to jurisdictional oversight. Phantom Fiber’s proprietary mobile platform supports more than 1,500 devices.

‘The alliance with Phantom Fiber furthers Youbet’s strategic effort to deliver on-demand pari-mutuel wagering services that rely on modern technology to connect with a whole new generation of customers,” said Jeff True, President of United Tote. “This step makes the wagering interface completely portable. So, it’s a logical extension given the evolution and growing popularity of mobile applications. We’re happy to be teamed with Phantom Fiber because they offer superior solutions across the broadest array of mobile devices.”

Jeff Halloran, Chairman and CEO of Phantom Fiber Corporation said that his company is excited about the opportunity to work with United Tote, a clear leader in technology development for racing. “This alliance will help to validate the mobile framework,” he said. “By taking advantage of Phantom Fiber’s technical edge – including rich, multimedia delivery and end-to-end secure data transactions – we expect to set new standards for mobile delivery in horse racing.”

About United Tote Company

United Tote designs, manufactures, and operates pari-mutuel wagering systems for more than 150 racing companies and numerous OTB facilities in North America and around the world. The company, established in 1959 and acquired by Youbet.com, Inc. in 2006, is recognized as the technology leader in open architecture network hub systems, terminal products and wagering applications. United Tote has hosted the Kentucky Derby for thirteen years supporting large onsite and merged handle increases. United Tote systems and terminals process more than $7 billion annually in global pari-mutuel handle. The company has proven its service and system capability by consistently setting performance records at America’s premier racing events. More information a can be found at www.unitedtote.com.

About Phantom Fiber Corporation

Phantom Fiber Corporation is a leading developer of wireless platform software that enables its customers to deliver high-performance applications across global communications networks to mobile users. Their wireless platform extends the rich multimedia content and user experience of existing Internet web sites securely and instantly to over 1,500 mobile devices including cellular phones and PDA’s. This platform is already deployed to most segments of the global gaming industry and can be used by enterprises seeking to implement high performance mobile applications in such markets as: remote video surveillance; banking and brokerage applications; as well as the logistics and distribution markets. For more information about Phantom FIber, please visit our web site at www.phantomfiber.com.

Online Giants Settle With US Government

In America, Microsoft, Yahoo and Google have agreed to pay $31.5 million to settle a Government probe into their roles in promoting online gambling dating back a decade.
The settlements mark the latest development in a US crackdown on online gambling that also included the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA).

According to the United States Department Of Justice, Microsoft’s settlement totals $21 million, including $4.5 million to the Government and a $7.5 million contribution to the International Center For Missing And Exploited Children.

Microsoft also agreed to fund a nine million dollar advertising campaign aimed at showing young web users that online gambling is illegal under US law.

Google agreed to pay three million dollars to settle similar charges while Yahoo’s bill came to $7.5 million in addition to a clause to fund an online public service campaign discouraging online gambling.

‘These sums add to the over $40 million in forfeitures and back taxes this office has already recovered in recent years from operators of these remote-control illegal gambling enterprises,’ said Catherine Hanaway from the Department Of Justice.

‘Honest taxpayers and gambling industry personnel who do follow the law suffer from those who promote illegal online behaviour.’

None of the companies admitted wrongdoing in settling allegations that they received payments from online gambling businesses for advertising. The three could have been prosecuted under the Federal Wire Wager Act, Federal wagering excise tax laws and various state statutes and municipal laws prohibiting gambling had they not settled.

Gambling software provider signs up anonymous Asian licensee

30 November 2007

Industry observers were speculating on the identity of a mystery Asian-facing online gambling licensee as the week closed, following a statement to the London stock exchange by industry software developer Playtech.

In the statement, Playtech revealed that it has signed up what it describes as a “significant” Asian-facing licensee – but could not release the identity of the mystery company due to “reasons of confidentiality”.

The statement did say that Playtech is to provide the unidentified operator with new Asian-focused peer-to-peer games, and claimed that the new licensee has a “strong and diversified presence in the Asia-Pacific region.”

The contract is “material to the future profitability” of the firm and Playtech announced that it is “expected to become earnings enhancing during the second quarter of 2008”.

Playtech CEO Mor Weizer said: “This is a significant new business win for Playtech and comes after lengthy contract formalities with the licensee.” He added that the scale of the operator and its large client base would make it a “very valuable addition” to the Playtech stable.

“The additional tools and features that we have developed for this operator will further strengthen Playtech’s market-leading position in the vast Asia-Pacific market,” Weizer said. “This licensee has deep-rooted experience and market reach and we foresee additional benefits for Playtech, particularly for our new Asia-facing games which we start rolling out over the next two quarters.”

We say our goodbyes to a Poker Legend…RIP Chip Reese

December 6, 2007Rumors started flying this morning carrying the sad news that poker legend Chip Reese had passed away. First reported by Daniel Negreanu, a friend of Reese, on his Full Contact Poker forum and picked up by 2+2 and other media sites, the news is still “technically” unconfirmed, but a false report by someone of Negreanu’s stature in the poker world would be inconceivable.

Reese was the youngest poker pro ever to be inducted into the Poker Hall of Fame after winning three WSOP Bracelets and countless major poker tournament cashes. His first WSOP bracelet came back in 1978 in the $1,000 Seven-Card Stud Split event and was followed in 1982 with a win in the $5,000 Limit Seven-Card Stud event. His most recent bracelet was for winning the inaugural $50,000 HORSE event in 2006, in which he and Andy Bloch set a record for a heads-up match at seven hours.

According to Wikipedia, Reese was born in 1951 in Centerville, Ohio, where he started playing poker at age five. He would go on to attend Dartmouth and then turn down an offer to attend Harvard, opting for Stanford Business School instead. After a tournament win of $40,000 in Vegas, he quit school and started playing poker professionally. Reese also wrote the seven-card stud section for the seminal poker strategy book, Doyle Brunson’s Super System.

RIP, Chip Reese. He was 56 years old.