2012

The best of GamblingCompliance – a collection of articles published in 2011/2012

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Contents

Spain Scraps New Year’s Online Gambling Launch

Greek Online Licensing Pushing Ahead

Danes Bring Christmas Cheer For 38 Operators

Battle Of The Bundestag Looms For German Tax Changes

Japan Gearing Up for Casino Legislation

Asia Regulatory Perspective: Macau’s DICJ

DoJ’s Wire Act Ruling Lights Fire For Federal Regulation

Nevada Backs Internet Poker Rules

Casino Heavyweights Ready For Battle In Massachusetts

DoJ Opinion On Internet Gambling Unlikely To Be Reversed

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Spain Scraps New Year’s Online Gambling Launch 03 Jan, 2012 / GamblingCompliance / Daniel Macadam

Spanish-facing operators breathed a sigh of relief yesterday as Spain’s newly-elected gov-ernment has given until June 30, 2012 for the launch of the online gambling market.

In their final cabinet meeting of 2011 ministers decided to delay the start of the new sanc-tions and sponsorship regime for online gambling by up to six months.

It was due to come into effect on New Year’s Day but with operators handing in piecemeal licence applications during December the government decided to give Spain’s gambling regulator more time to “resolve certain licence applications”.

The last-minute change, brought in alongside a bundle of other emergency financial meas-ures, means that Spain’s online gambling sanction regime will start when the first round of licensing is finished or on “June 30, 2012 if that order has not been published before that date”.

It also enables sponsorship deals signed before January 1, 2011, including Bwin’s lucrative tie-up with Real Madrid football club, to stay in place until then.

Spanish online gambling association AEDAPI yesterday welcomed the extension and antici-pated any further regulatory changes brought in by the new government would be “key”.

Last month 62 companies applied for more than 300 online gambling licences from Spain’s Dirección General de Juego.

However, the quick turnaround for operators meant many of those were either late or incomplete.

Spanish lawyer Xavier Marti estimated that only two or three companies ticked all the boxes and the rest would need a few extra months “breathing space”.

Marti also predicted that Betfred, 12bet, Expekt, Unibet, Pinnacle and BetClic were among those gambling firms which chose not to apply for a Spanish licence.

For now, ministers have decided not to call a new tender alongside the moratorium and so the application remains closed, according to legal experts.

Cristina Romero, partner at Madrid-based Loyra Abogados, said for those which did ap-ply: “[The] question is now whether the (way too) short period for filing applications that lapsed last 14 December 2011 was justified or not.”

The delay also raises fresh questions over the legality of existing online gambling offers.Spanish gaming firm Codere has continued its assault on remote gambling rivals with claims of a fresh injunction against the market-leading betting sites of Miapuesta, run by Sportingbet.

Just days before the government decided on the delay, Codere announced it had secured the injunction from a Madrid commercial court against miapuesta.com and miapuesta.es on the grounds that the sites were anti-competitive.

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“This ensures that these portals will not be available from Spain until the pending law suit is settled or the injunctions are lifted,” the Madrid-based company said in a press release on December 29.

Codere explained that the order sought a wide-ranging prohibition “of online gaming ac-tivities in Spain, of advertising of gaming activities, of obtaining, using or transferring per-sonal data obtained through online activities and of sending individual or massive notices by e-mail relating to online gaming activities”.

Local press reported that the court order also included a requirement that payment proces-sors, including Paypal and Mastercard, as well as internet service providers block access to the Miapuesta portals.

However, Sportingbet has shrugged off the claims and still had its miapuesta.com site up and running at the time of writing.

“We understand that no injunction has been served on us. No injunction has been served on our suppliers,” the London-listed online gambling firm told GamblingCompliance.

Holder said he was willing to cooperate, but the Department of Justice has not yet re-sponded to the Kyl-Reid letter of July 14.

Kyl’s collaboration with Reid is indicative of the respect he has earned on both sides of the aisle despite his staunchly conservative politics.

“I disagree with his position on Internet gambling, but his opposition has always been based on rational arguments,” Kelly said.

When Kyl was appointed to the super committee on the deficit last month, some Internet gambling advocates feared he would not have enough time to cut a deal this year with Reid on an Internet poker measure. The committee must finish its work by Thanksgiving in late November.

But others see Kyl’s appointment as an opportunity to legalize online poker instead of rais-ing taxes to reduce the national debt.

“Kyl has the power and ability to team up with Reid and get something done,” said Law-rence Walters, an attorney in Altamonte Springs, Florida who represents online gambling operations.

“They could sell this to the American people and the Tea Party by saying the legalization of Internet poker means Congress won’t have to raise taxes.”

Kelly agreed, describing Internet gambling as “an industry that is begging to be taxed.”

No matter what happens with the super committee on the deficit, the consensus is that Congress will remain unlikely to pass any Internet gambling legislation before the end of 2012 unless Kyl and Reid can reach an agreement.

But even after he leaves the Senate, Kyl may still be in a position to influence Internet gambling. When he announced his retirement in February, he pointedly declined to rule out being a vice presidential candidate in 2012.

“I have no idea what he plans to do after he leaves the Senate,” said August, the Arizona historian. “But I don’t see Jon Kyl totally going away.”

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Greek Online Licensing Pushing Ahead 01 Dec, 2011 / GamblingCompliance / Andrew Gellatly

The state secretary helming Greece’s online market transformation says plans to regulate in-ternet gambling will go ahead despite objections by industry lobby groups, with operators already jockeying for licences in behind the scenes moves.

In August Greece’s parliament approved controversial measures that outlined a number of measures to restructure Greece’s land-based and online gambling markets. The legislation, which specifically requires new operators to be based in the country and handle financial transactions with Greek banks, could yet prove to be non-compliant with EU law and has provoked howls of protest from online operators, with a complaint lodged this week at the European Commission by the European Betting and Gaming Association in Brussels. George Christodoulakis, special secretary for asset restructuring and privatisations at the Greek Ministry of Finance, whose responsibilities include the gambling market privatisation, this week bit back at the complaints, insisting lawmakers had already been attentive to the views of stakeholders. “We went through wide public consultations for this law and I held numerous meetings in my office with all market participants. The door was open for everybody and we tried to accommodate often conflicting views,” Christodoulakis said. Speaking at the inaugural Gaming Money conference in Athens on Tuesday, the state sec-retary defended the process by which the law had been drafted. “I understand a number of market participants still have complaints with a view that a number of their concerns have not been accommodated. I must say that this law has tried to accommodate all market criticism, and it is virtually impossible to satisfy 100 percent of all requests. “The recently passed gaming bill means we have certain views about the gaming market. This law reflects a synthesis of a number of views. So I shall not anticipate any court deci-sion.” The state secretary also confirmed that the Ministry of Finance had already received pre-liminary applications from some of Greece’s leading, but so-far unlicensed, online opera-tors seeking to be the first to pay tax of 30 percent of their gross gaming revenues in the country, but insisted that they had not yet issued any licence guarantees. “We need room to study this thoroughly, then try to see how we can put this into practice, but so far there is no such decision,” said Christodoulakis. In a partial sop to online operators earlier in the year, the Greek finance ministry reversed the idea of a blackout period for new licensees, instead proposing that those companies currently operating in Greece continue to advertise and pay tax in the country from January 1, 2010. London-listed Sportingbet, which operates in Greece in partnership with Centrica, con-firmed yesterday it has been among those accruing gross profit taxes since mid-August but has not made formal payments yet because a legal mechanism is not in place.

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Conceding that negotiations had not yet progressed as far as a deal to pay taxes in return for a licence Sportingbet CEO Andy McIver said: “The only thing he [the finance minister] has said to us is: ‘I can see no reason why you wouldn’t get a licence.’” Speaking with GamblingCompliance, Christodoulakis admitted that the transitional Lucas Papademos-led government would likely be replaced in February’s election, but in the meantime they were pushing ahead with their plans to put in place a regulatory watchdog for online gambling. “The crucial element is to fully activate the gaming commission to have a tender process for internet gaming licences, and this is in progress. “We are committed to this and we are working on this and we will present decisions fairly soon so the fact that this government has a fairly limited term does not mean work stops.” “A number of decisions may belong to the new government but we will see — we need a minimum political horizon to make decisions. In the meantime we are working on it.” Still, the new rules that will see a yet to be determined number of online licences issued is coming under fire not just from online groups themselves, but from the powerful and vocal agents representing Greece’s offline betting monopolist OPAP. Iraklis Lappas, the secretary general to the OPAP agent’s group POEPP, fumed that: “What was illegal until today will now become fertile soil for exploitation.” Lappas added that OPAP agents who had bought their offline concessions believed they would own rights to sell betting products without the threat of state-sanctioned online competition. “Those rights were not a present to OPAP — they were bought by OPAP. What OPAP has it has paid for.” Lappas indicated that the agents would consider their own litigation if the licensing scheme went ahead.

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Danes Bring Christmas Cheer For 38 Operators 16 Dec, 2011 / GamblingCompliance / William Chambers

The Danish Gambling Authority yesterday cleared its first batch of licensees to begin oper-ating in the new online gambling market from January, but the future of what will be an instantly competitive market remains difficult to predict.

The Danish Gambling Authority (DGA) approved 38 out of the 43 applicants yesterday, handing out a total of 55 licences that will allow companies to offer either sportsbooks or casinos to Danish customers.

From January 1, 2012 online gambling will be allowed under one of the most liberal legal regimes in Europe, a year to the day since the market was first tipped to open. Minister for Taxation Thor Möger Pedersen commented: “From January the gambling mar-ket will be orderly and we will ensure that holders of a betting and online casino licence to operate on the Danish market also contribute to the society. “Danes as well as the many associations supported by the gambling market can be joyful.” According to a list published yesterday on the regulator’s website, the majority of heavy-weight operators will be in the market come January. Bet365, Betfair, Bwin.Party, Ladbrokes, Sportingbet, Unibet and former monopoly Danske Spil have received both betting and online casino licences. Others, such as PokerStars and 888, have been approved to only operate under online casino licences next year. However, some major bookmakers including William Hill, which confirmed last night it did not apply for a licence, and Paddy Power were not on the list of approved operators but may still enter the market via their licensed partners. Birgitte Sand, director of the DGA, reiterated last night that the application process is ongo-ing and said operators who failed initial checks are welcome to resubmit applications. Speaking to GamblingCompliance, she said those who were not approved failed on either “economic issues” or an inability to conform to the complicated technical standards. The application process was already foreshortened by the European Commission’s state aid investigation, and has been dogged by complications including just last week the failure of the player verification system. Part of the reasons for complication is the need to ensure the regulator has a secure access to operators’ servers, as the legislation allows companies to remain based offshore provided the regulator can carry out necessary checks. Denmark has signed three bilateral cooperation agreements with other jurisdictions thus far, and DGA director Sand said these will help enforce the nascent market. Sand said: “We intend to share information and it all helps to make the market more legal.”

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“The agreements let operators out there who are not on the legal market know that we can exchange information with their regulator regarding their conduct.” She added: “We will do our very best to show it is not just talk, because we owe it to the new licensees and to the Danish players.” In addition to a ban on advertising by unlicensed operators, the Danish authorities will be able to use both IP and payment blocking to enforce the new legislation. However, Morten Ronde, CEO of the newly formed Danish Online Gambling Association (DOGA), said positive legislation will do much of the work for the regulator. “The most important way of protecting a market is to have a good gambling regime, so you don’t have to depend on IP and bank blocking,” he argued. “The news media will have so much business from licensed operators they are not going to want to take ads from unlicensed operators now.” The Danish market’s launch has been eagerly anticipated by operators due to its liberal online gambling regime and attractive tax rate. But while a completion could well help force out unlicensed companies, question marks remain over how many gambling websites can be supported by the country’s 5.5m citizens. “There will probably be some companies dropping out over the next 12 months,” admitted Ronde. A City of London analyst who covers many of the now-licensed operators predicted that Denmark “is not going to sustain a lot of companies”. He said: “We’ll see a few scaling back, a few dropping out and a few more who end up winners, but it is hard to say who that will be at the moment. “It will be a very open market to begin with.”

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Battle Of The Bundestag Looms For German Tax Changes

21 Dec, 2011 / GamblingCompliance / Daniel Macadam and William Chambers

The German government will forward to parliament a proposal undermining the mooted Schleswig-Holstein betting tax regime by February, just weeks before the breakaway state is due to issue online gambling licences.

Proposals that would have the effect of torpedoing attractive online betting tax rates in the northern state of Schleswig-Holstein were approved by Germany’s federal council, the Bundesrat, last Friday and will now be forwarded to the German federal parliament, the Bundestag, in the next three to six weeks.

Online gambling operators are already mustering their arguments, with Schleswig-Holstein-based bookmaker Jaxx asserting the fiscal changes will need to be scrutinised by the Euro-pean Commission. However, the Bundestag is only required to deal with the amendments bill within an un-specified “appropriate” timeframe, plunging Schleswig-Holstein’s online gambling market and licensing process into further uncertainty. “At the moment things are completely uncertain,” said Christoph Enaux, gaming lawyer at Olswang’s German office. “The speed with which it is dealt with really depends on whether the Bundestag has some concerns from a constitutional law perspective. Also given that this is a new tax I am not sure it will be easily passed.” The change to the 1922 “Rennwett und Lotteriegesetz” seeks to fix sports betting tax at 5 percent of turnover for foreign and domestic firms. That would hand a tax break of almost 12 percent to Germany’s state lotteries and would look to snare offshore betting firms in the tax net for the first time. Lawyers note the 5 percent turnover rate would also supersede Schleswig-Holstein’s own 20 percent gross revenue betting tax. Paul Leyland, gaming analyst at Investec, said: “The winners from this would be the lotter-ies, as well as anyone who can supply lotteries with product and who don’t have much to lose from german.com. “The losers would be everyone else.” State lottery group, the Deutsche Lotto und Toto Block, said that the legal changes were “necessary” so that everyone in the German market pays the same taxes. While Mathias Dahms, board spokesperson at Jaxx, said: “Sure it puts some extra pressure on the Schleswig-Holstein government, but we are convinced that Prime Minister Carstens-en holds fast to his chosen course as the draft of the 15 [regions] is hardly carried over the EU hurdles. “Changing the ‘Rennwett- und Lotteriegesetz’ of 1922 would be a big challenge for Germany,” Dahms added and predicted it might need to go to the European Commission before it is ratified.

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The Bundesrat, the Berlin council of the German state governments, used as justification for the tax amendment a provision in the German constitution allowing federal law to over-rule state law in cases where harmonisation is needed. But Enaux explained that the issue is far from clear-cut. He said: “The constitution really only says the federal government is competent if there is a need for a German-wide harmonised solution. The big question now is whether there is such a need. “There is always a need for a harmonised solution when a tax is imposed on end custom-ers, but because this will be imposed on operators, I don’t really see that there is an abso-lute need for a harmonised approach across Germany.” With the issue now in the hands of the federal parliament, Schleswig-Holstein’s plan to distribute online sports betting licences in March is looking increasingly bunkered. “It will be very interesting to see what happens around licensing in Schleswig-Holstein,” Enaux said. “At the very least Schleswig-Holstein will probably impose a lot of caveats in the licence conditions allowing them to retrospectively change the rates, if this question is not dealt with by March. “If Schleswig-Holstein is still considering whether to sign the Interstate Treaty, I think they would be very hesitant to give out licences as they would run the risk of having to pay damages to operators.” Online gambling firms, which have so far piled in behind the northernmost German state’s proposals, may also become hesitant about taking a Schleswig-Holstein licence which car-ries with it caveats and far from certain tax obligations. Just this week London-listed 888 said it was undecided about applying in Schleswig-Hol-stein because it was unsure how Germany was “going to pan out”. Barbara Ploeckl, a gaming specialist at Freshfields law firm, explained: “Schleswig-Holstein would still be more attractive than the other solution for the rest of Germany.”

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Japan Gearing Up for Casino Legislation 24 Nov, 2011 / GamblingCompliance / Yuriko Nagano

Japan’s leading political parties are summoning separate work groups as advocates of ca-sino development are eyeing submittal of the legislative bill to parliament in 2012.

A group within Japan’s ruling Democratic Party of Japan plans to meet Friday for the first time to discuss and review the draft law put together by the 140-some member Committee of Lawmakers for the Promotion of International Tourism, dubbed “IR Giren”.

Chaired by DPJ House of Representatives member Kenji Tamura, the group’s title translated into English is “Working Team Considering Integrated Resorts and Casinos”. The group will, for starters, study cases of casino development overseas from countries like Singapore, invite academics to offer insight and then deal with any concerns raised by DPJ lawmakers on the casino bill. “We purposely put in the word ‘casino’ in the group name so it is clear to anyone what we are discussing here is about casino development,” said Satoru Iyama, legislative staffer for the lawmaker Tamura. The measure from the IR Giren has an unwieldy name, “Bill to Promote the Realisation of a Special Zone for Integrated Resorts” and excludes “casino” in the title. “Most people are not familiar with the term ‘integrated resort’ and if we called our group that we were fearful we may miss opportunities to hear from everyone,” said Iyama. “We need those who oppose casinos in Japan to show up and argue their concerns.” With 17 core members, half of the working group is composed of IR Giren members. “We’re not sure how many DPJ members may oppose this legislation or what issues may be contentious,” said Iyama. “We do anticipate discussing problems like gambling addic-tion and public security deteriorating because of casinos.” It is possible Japan may operate like Singapore, to ward off worries on public safety by allowing foreign nationals to visit casinos for free and promote tourism but charge its own citizens for casino access to limit traffic. Japan could also go the route of South Korea, where there is only one casino in the country South Koreans can go to while others are ac-cessible to foreigners. Changes to the casino bill are certainly a possibility and compromises may be reached in some cases, the secretary said. “We will probably meet once or twice a week to go over the issue and try to get some direction on whether we can get a consensus by the end of this extraordinary parliament session, which ends in December,” said Iyama. These DPJ meetings are scheduled to be open to all members of the party. The rivalling Liberal Democratic Party says it will start its own discussion group before the end of November or the beginning of next month.

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“Each party supporting this bill is going to have to review the bill with their own party members and suggest changes, if any,” said Takayuki Aoki, policy secretary to LDP House of Representatives member Takeshi Iwaya. Iwaya is the acting chair of the IR Giren. “At the LDP, we’re going to monitor a bit what issues crop up over at the DPJ and then start,” he said. Aoki said likely points of debate may be negative images lawmakers may hold of casinos. “There may be some outdated belief that the mafia is somehow involved in the casino business or it would have a bad effect on Japanese youth in the community or funds from gambling will be diverted to organised crime,” said Aoki. Supporters of the casino bill including Aoki are hoping to submit this measure during the next parliamentary session, which starts in January. Aoki believes the recent scandal involving the former chairman of Daio Paper Corp. could potentially harm the casino measure. Daio’s ex-chairman, the grandson of the founder, has been arrested this week on suspicion of funnelling ¥10bn of corporate funds from the company’s subsidiaries, much of it to use on his own gambling at foreign casinos. “The Daio scandal has given casinos a bad image,” said Aoki. Aoki said there had been some movements in the last few weeks in Japan. Gary Loveman, head of Caesars Entertainment Corp., presented his company’s case study to Japanese lawmakers at a study group as a lecturer in October. “Loveman appealed to legislators, asking for a speedy passage of the casino bill,” said Aoki. “Although Caesars is a big name, many Japanese lawmakers are not aware of them, so Loveman informed us on how the Caesars group operates globally. Loveman did men-tion should casino development become a reality in Japan, his company was ready to make a big investment here.” Aoki said representatives from other casino businesses such as the Las Vegas Sands Corp., which has properties in Macau and Singapore, the Genting Group that operates casinos in Malaysia, Singapore and Hong Kong and Melco Crown Entertainment of Macau have also presented their businesses to Japanese lawmakers in the past. Steve Wynn, CEO of Wynn Resorts, was scheduled to make a Tokyo appearance mid-March but had to cancel due to the devastating March 11 earthquake, tsunami and radioactive fallout from the Fukushima Daiichi nuclear power plant that happened two days before the visit. There probably will not be many hurdles that will crop up to slow down passage of the measure but exact timing of the bill’s submittal remains unclear, said Takashi Kiso, CEO of International Casino Institute Ltd. in Tokyo, which provides consulting services. “The policy chiefs for both the dominant DPJ and LDP are both strong casino supporters, but if the two parties start to fight over other political issues, things could change,” said Kiso. “The casino bill can be affected by unrelated squabbles.” Kiso said the casino bill should be hitting some milestones in the coming months if things go smoothly.

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“The DPJ is going to try to reach a tentative decision on the draft bill from the IR Giren in December,” said Kiso. “They’re probably going to agree or disagree on the bill’s outline. If all goes well the measure will then move on to be reviewed for submittal after the New Year. After that, depending on what the state of parliament session is like the bill will actu-ally be submitted.” As for where in Japan casinos could be built, Kiso said, ultimately casino development will take place in “a community where the local government and its inhabitants have already been showing strong support” like Osaka and Okinawa. “A civic movement to build casinos in Tokyo hasn’t happened and so I think it’ll be difficult to develop casinos here,” said Kiso. “Communities that have political leaders who have pledged commitments on the casino issue are one step ahead.”

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Asia Regulatory Perspective: Macau’s DICJ

26 Sep, 2011 / GamblingCompliance / Martin John Williams

GamblingCompliance spoke to Anthony Leong, deputy director of the Gaming Inspec-tion and Coordination Bureau (DICJ), at his Macau office on September 22.

Regulatory matters in Macau have come under increasing scrutiny in recent months as casino operators and local media express their concerns over government handling of land, junket, tendering and other licencing issues. GamblingCompliance last week spoke to the regulator in charge of overseeing the world’s most profitable casino gambling market.

GamblingCompliance: What are your priorities over the next few years in regu-lation and enforcement?

Anthony Leong: I think we will continue to improve and revise our laws related to gaming. Law No.16/2001, which we generally call the Gaming Law, sets out the basic gaming standards of Macau, but this law was published in 2001, which means it’s al-most ten years old [laughs], it certainly needs to be reviewed as the gaming industry has had a lot of changes over the years.

Other laws, for example the credit law and the anti-money laundering (AML) law, will also need to be improved or amended. Especially with regard to gaming, the Macau government is now paying very close attention to prevent money laundering and has joined the Asia/Pacific Group on Money Laundering (APG).

We have had close cooperation with the Financial Intelligence Unit (FIU) of Macau. The FIU also joined meetings and has close communications with the APG and the Financial Action Task Force in relation to money laundering.

We will also have a new regulation on slot machines. The government also wants to raise the minimum age for casino entry from 18 to 21, including staff. We hope that the Legislative Assembly will [pass] this law before the end of this year. We have been talk-ing about it for a long time. This law is very important for younger people.

GC: The sports betting concession held by Macau Slot, an effective monopoly, has been renewed for one year three years in a row. Will foreign companies be invited to bid next time?

AL: Your question is sensitive because now the public is very concerned that the gaming industry is developing too fast and this will affect some young people and cause prob-lem gambling.

GC: So by retaining a monopoly the government is controlling problem gam-bling?

AL: It is a challenge for the government to think about changing the way sports betting is operated in Macau: What way is better? Can we open this licence without affecting our younger generation? It is not easy to solve this problem. But I know the government is in the process of studying the feasibility of enhancing the current operational module of the Sports Lottery in Macau. I think it will need a little more time.

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GC: In late July the police held a press conference at which it paraded seven sus-pects from China who allegedly swapped shuffling machines on a baccarat table; the new machines were fitted with cameras that allowed them to determine card order. The police were first alerted to the machines in January, but on March 28 a casino lost $3m to the scammers. The media did not report either story until the press conference. First, do you know which casino was involved?

AL: This case has been reported to the police. I think the police have it under investigation so I think it may not be proper for me to make any further comment. But I think this is just an isolated case.

GC: When did the DICJ first know about this scam? Did the police tell the DICJ be-fore the media reports came out?

AL: After they first reported it to the police, they also reported it to the DICJ.

GC: Do you know when?

AL: Usually after verbal reporting, they will directly send a written report to the director [Manuel Joaquim das Neves] for further clarification of the case.

GC: One concessionaire told GamblingCompliance that it didn’t know the doctored machines were circulating until the news reports came out. The police knew of the machines in January, so one concessionaire and possibly more did not know until July. What is your comment on this situation?

AL: I think it is not fair for me to make a comment because the police are in charge of the investigation and we do not know the whole story.

GC: Are you looking into any issues relating to the US government investigation into Sands China Ltd following allegations from former executive Steve Jacobs?

AL: I think for the time being we will wait and watch what goes on. But we are paying at-tention to this case. We have also requested that the Venetian submit reports to us regu-larly to explain the case and what is going on [Note: “Venetian” here refers to Venetian Macau S.A., the Sands China subsidiary that holds a casino sub-concession].

GC: In the Wikileaks files, allegations were made by executives from certain U.S. companies that the DICJ does not monitor junkets properly. Do you have any com-ment on this?

AL: I think the culture is quite different between America and Macau. Macau has had jun-kets for a long time, even before [market liberalisation] in 2002. Another thing, the Macau government thinks junkets can provide good service such as free hotel, free transportation, free meals to their customers because the junkets want the business, the commission. They will give good service to their customers to attract more people to come to Macau. Also, the VIP businesses can arrange a [gaming] room for them; they won’t need to bet with a lot of people. America does not have this history.

Junkets need to apply for a licence with us and the licence must also be renewed with us every year. So, if they do not comply with the related laws and regulations in Macau, espe-cially the Gaming Law, the Credit Law, the Anti-Money Laundering Law and regulations on the Commission Cap, etc, they will be subject to respective penalties.

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DoJ’s Wire Act Ruling Lights Fire For Federal Regulation

03 Jan, 2012 / GamblingCompliance / Tony Batt

December’s landmark interpretation of a 1961 anti-gambling law by the U.S. Department of Justice may pressure Congress to pass a bill authorizing federal poker regulation before the end of 2012.

While more hearings on an Internet poker bill already are planned in the House of Repre-sentatives, there is a new sense of urgency after the justice department declared December 23 that only sports betting activities — but not online poker, casino games or lotteries — are prohibited by the 1961 Wire Act. Despite the activity in the House, the Senate remains the primary focus of gambling indus-try lobbyists. Senate Majority Leader Harry Reid of Nevada remains committed to Caesars Entertainment, MGM and other Las Vegas casinos which helped him win re-election in 2010 and continue to lobby aggressively for federal regulation of Internet poker. The casino industry’s hope is that Reid can broker a deal with traditional online wagering foe Jon Kyl, the influential Republican senator from Arizona, perhaps as early as the end of February when Congress must vote again on an extension of the payroll tax cut. Under this scenario, Reid could add a provision authorizing Internet poker to the payroll tax cut extension legislation. But lobbyists warn the political backlash, especially in a fraught presidential election year, could be severe. “It all depends on Harry Reid’s pain threshold,” said one gambling industry lobbyist who requested anonymity. On the same day the justice department reversed its longstanding view that the Wire Act applies to all forms of Internet gambling, the department rejected a July request from Reid and Kyl to reiterate its stance that the 1961 law would prevent online expansion on the part of state lotteries. “The Unlawful Internet Gambling Enforcement Act of 2006 provides that ‘unlawful Inter-net gambling’ does not include intra-state law transactions, which are authorized under state law and meet certain other requirements even if communications are routed across state lines,” Assistant Attorney General Ronald Weich wrote to Reid and Kyl. Weich’s response could make Kyl, who has invested great political capital in efforts to toughen U.S. laws on Internet gambling and who will retire at the end of 2012, more anx-ious to reach an agreement on a tight poker-only bill with Reid this year. The department’s new position also could escalate an increasingly bitter competition be-tween Congress and state governments over whom should regulate Internet gambling. Democrat Barney Frank of Massachusetts, the longest-standing proponent of Internet gam-bling regulation in Congress, is backing off his previous comments that a federal regulatory regime would be preferable to “a patchwork” of state-by-state oversight.

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“A patchwork of regulation is better than no Internet gambling regulation at all,” Frank told GamblingCompliance. But the American Gaming Association, FairPlay USA, the Poker Players Alliance and other lobbying groups who want federal regulation of online poker are not so conciliatory. “State-by-state licensing and regulation could result in a balkanized online poker world where players across the nation would be limited in their choices of where and against whom they could play,” former New York Senator Alfonse D’Amato, who is PPA’s chair-man, said after the justice department’s ruling. Meanwhile, lobbyists for state lottery interests are mobilizing to fight any effort by Con-gress to pass a bill authorizing federal regulation of Internet gambling. The December 23 reversal of opinion from the justice department, although widely antici-pated throughout the gaming industry, was still seen as a surprising move. “This seems strange coming after Black Friday,” said Joe Kelly, a business law professor at SUNY College in Buffalo and an Internet gambling expert, in reference to 2011’s escalation of law enforcement efforts against offshore poker sites. Some are already calling December 23 White Friday in contrast to Black Friday on April 15 when the justice department indicted founders of the three largest U.S.-facing poker operators including PokerStars and Full Tilt. Nevada and Washington, D.C. already have legalized Internet gambling within their own borders. Since the justice department’s opinion responded to inquiries from Illinois and New York, both of those states are expected to allow their lotteries to start selling tickets online within the next few months. “I would not be shocked to see Congress do away with the Unlawful Internet Gambling Enforcement Act, and replace it with a bill that legalizes and regulates online poker,” said Brian Gallini, a law professor at the University of Arkansas who follows Internet gambling. Ian Ramsey, a Louisville, Kentucky attorney who represents Internet gambling operators, said the December 23 ruling indicates President Obama’s administration is paying more at-tention to the online wagering debate. “Maybe we have entered a new era,” Ramsey said. “The point is that this issue was consid-ered important enough by the administration to reach the [justice department’s] Office of Legal Counsel to be considered.” While Congressman Joe Barton of Texas, John Campbell of California and other sponsors of Internet gambling bills remained tight-lipped about the significance of the December 23 ruling, Congressman Frank said the opinion will add momentum to efforts in Congress to pass an Internet poker bill by the end of the new year. “I do feel vindicated,” said Frank, who also plans to retire at the end of 2012. “I think this is a great example of grassroots democracy,” Frank said. “This always has been an issue of personal liberty to me, and it’s gratifying to see it gaining traction.”

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Nevada Backs Internet Poker Rules

23 Dec, 2011 / GamblingCompliance / John Edwards

Nevada regulators yesterday approved Internet poker regulations, enabling in-state poker websites to start operations within a few months.

Several dozen industry representatives applauded when the Nevada Gaming Commission voted 4-0 to approve the online poker regulations. (Commissioner John Moran Jr. was absent.)

Nevada hopes to become the first state with legal, online intrastate poker, although the District of Columbia a year ago authorized online poker inside its city limits. “Historic may be too strong a word (for the regulations),” Commission Chairman Peter Bernhard said. “This is a new day.” Commissioner Tony Alamo, a medical doctor whose father worked in the casino industry, said he was proud to participate in the rulemaking process. “We’re going into a whole new era,” Alamo said. “We don’t know what we don’t know yet. This is moving fast.” The regulations allow Internet poker operators, service providers and manufacturers to start Internet poker operations inside Nevada as soon as they get licenses and technical approval from Nevada regulators. But the state law prohibits online poker companies from operating across state lines until the federal government legalizes interstate poker. Alamo suggested that Nevada could approve licenses for online poker operators within three months. Mark Lipparelli, chairman of the Nevada Gaming Control Board, which advises the commis-sion, declined to predict the timing. But Lipparelli said Alamo’s projection was “in the ball park” and a good estimate of the time needed to begin online poker in Nevada under the new rules. “There are a lot of gates between passing the regulations and someone turning the switch on (for online poker),” Lipparelli said. To be licensed, applicants must prove that their technology will prevent out-of-state gam-blers from participating in Nevada online poker games, Lipparelli said. “A handful of companies are moving forward,” Lipparelli said after the meeting. They in-clude Cantor Gaming, Shuffle Master, 888 Holdings, International Game Technology, Bally Technologies and Caesars Entertainment. Cantor Gaming seeks licensing as an Internet service provider so that it may manage sys-tems for operators. Cantor Gaming Chief Executive Lee Amaitis said his company will start preparations for its launch of Nevada Internet poker operations. He declined to say when his company would begin operations or whether it would wait for federal officials to sanction in-state online poker. Gaming attorneys disagree over whether intrastate online poker is legal under fed-eral laws.

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Senate Majority Leader Harry Reid, D-Nev., and Sen. Jon Kyl, R-Ariz., in July sent a letter to federal officials on the legal question. They asked the U.S. Justice Department to explain whether it still believes Internet gambling, whether interstate or intrastate, violates federal laws. No response has been received. Alternatively, questions about the legality of online poker could be resolved through con-gressional action or a court decision. Despite the legal issues, the rulemaking process in Nevada went smoothly with little contro-versy. However, Las Vegas Sands Chairman Sheldon Adelson opposes state licensing and regula-tion of online poker because he said he fears it will lead to underage gambling, according to the Las Vegas Review-Journal, a daily newspaper. Amaitis favored the new regulations and suggested the rules will put Nevada in a good position for growth in the gambling industry. “It’s going to make other states wake up,” Amaitis said. Attorney Robert Faiss of Lionel Sawyer and Collins predicted Nevada would play a pivotal role in the development of online gambling, much as it did in 1931 with licensing of brick-and-mortar casinos. “What you do here will be noticed and will influence the future in a positive way,” Faiss said. The state’s relatively small population of 2.7m people may make it difficult for poker websites to operate profitably inside the state. However, Nevada leaders hope that Internet poker operators will use the Nevada venue as a springboard for nationwide online poker once that becomes legal in the United States. Governor Brian Sandoval in June signed Assembly Bill 258, which required the commission to adopt Internet poker regulations by the end of January 2012. At the meeting Thursday, Bernhard asked whether the regulations met the standards set by the legislature, including safeguards against underage gambling, protections for prob-lem gamblers, prevention of fraud and provisions for helping law enforcement investigate money laundering. Senior Deputy Attorney General Michael Somps said the rules did satisfy those standards, citing specific provisions. The rules direct Internet poker operators to implement procedures for detecting money laundering and fraud. Anonymous poker accounts are prohibited. Internet poker operators are required to keep records for five years on players, their com-munications with players, deposits and withdrawals from player accounts, complete histo-ries of games, the outcome of games and disputes between players. Somps also mentioned requirements that operators ensure confidentiality of player ac-counts and protect player account money from misuse. To participate in online poker games, gamblers must provide identification, a home address and, if the player is a United States citizen, a Social Security number. An individual can have only one gambling account with an operator and cannot play more than one position in a game at any one time. The operator is prohibited from extending credit to a player and from allowing a player to overdraw his account.

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The Nevada Council on Problem Gambling asked the commission to add several amend-ments to the regulations. Instead of making last minute changes to regulations, Bernhard suggested the regulatory staff consider the council’s recommendations when reviewing license applications. The council proposed requiring poker websites to enable players to limit the amount of their wagers, their losses and time spent gambling. The council also suggested that poker websites have links to sites for problem gamblers and a toll-free phone number that problem gamblers may call for help.

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Casino Heavyweights Ready For Battle In Massachusetts 12 Dec, 2011 / GamblingData / Scott Van Voorhis

The world’s wealthiest casino empires are competing for the chance to plant their flags in the potentially lucrative Massachusetts market, with Caesars Entertainment, Wynn Resorts and Penn National all in the mix alongside Ameristar, Hard Rock International, Mohegan Sun and others.

A soon-to-be-formed gambling commission will oversee the bidding, with the power to dole out three licenses, each one designated for a different part of New England’s wealthi-est and most populous state.

So far, the Eastern/Boston region and Western Massachusetts have attracted the most potential bidders, while competition in Southeastern Massachusetts has lagged. But while money talks, in the end, who wins and who loses in the high-stakes competition for a piece of one of the last great untapped U.S. markets will come down to how well the different casino giants can manipulate a myriad of local and state political levers, industry observers say. “It gets more interesting all the time,” said Clyde Barrow, director of the Center for Policy Analysis at the University of Massachusetts Dartmouth, of the steady profusion of bidders. Showdown in the East Of the three Massachusetts casino licenses, the most lucrative will be the one awarded in the eastern region. It includes Boston and its suburbs — New England’s economic engine and its wealthiest and most populous area. One Wall Street analyst has even suggested there is room for two major casinos in Boston, the state capitol. A high-powered group with hopes of building a casino at Suffolk Downs in Boston has long been considered the front-runner for a casino license. It is a team that includes a well-connected Boston business executive, Joseph O’Donnell, New York casino developer Rich-ard Fields and Caesars Entertainment, the Nevada casino company led by a former Harvard business professor in Gary Loveman. But a funny thing happened on the way to the coronation — an equally well connected and powerful bidding team has suddenly emerged in Boston’s suburbs. Steve Wynn’s Wynn Resorts has teamed up with billionaire New England Patriots owner Robert Kraft on a proposal to build a mega casino just across the street — in this case a state highway — from the Patriots football palace. It is a marriage of a legendary Las Vegas casino mogul with one of the most respected business leaders in Massachusetts. That said, the Wynn/Kraft group faces a number of challenges. While Kraft hopes to stay within bounds of NFL restrictions on investments in casinos by limiting his financial involvement to a land lease, he faces a more daunting task winning over the residents of Foxboro, the Patriots hometown, to the idea of hosting a casino in addition to a professional sports team.

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Traffic is already a headache on congested Route 1 and even summertime concerts at the stadium have been source of complaints. Not long after Wynn and Kraft held a joint press conference to discuss their plans, placard-carrying protesters started to appear around town. Under the new casino law, the Wynn/Kraft team will have to win over Foxboro residents in a community-wide referendum. In addition, they will also have to cut deals with surround-ing communities that have concerns about traffic and other issues. While the Wynn/Kraft casino proposal has grabbed headlines, the pair seem be off to a rocky start winning over local residents. By contrast, Suffolk faces a much easier approval process. A provision in the casino bill lets developers with casino plans in cities larger than 125,000 skip the community-wide referendum and simply take a tally of the neighborhood. That means Suffolk will only have to win over East Boston and possibly neighboring Revere as well, where it still controls a license to the now defunct Wonderland dog track. Many track employees live in the two communities. Boston Mayor Thomas M. Menino, who controls a powerful urban political machine and ul-timately decides what gets built, has been a big fan of the Suffolk proposal. Revere’s mayor has also been an avid slot supporter as well. The wild card in the Boston area is a proposal by Colorado developer David Nunes to build a casino in suburban Milford, not far from Foxboro. While his backer, Warner Gaming, is not in the same league as Wynn or Caesars, Nunes has spent years lining up support of town officials and residents. Dogfight in the West If possible, the competition for the Western Massachusetts license may be even more fero-cious than in the central region of the state. While Mohegan Sun was the first to roll out casino plans, it has some major vulnerabilities that make the competition for the western license a much more open game. On the plus side, Mohegan has spent years winning over officials and residents in Palmer, near the Connecticut border, to its plans to build a smaller version of Mohegan Sun. But the Mohegan Tribe is also in the midst of refinancing hundreds of millions in casino development debt, which has limited how much it can put into various deals. In addition, Mohegan, which has spent years profiting off of Massachusetts gamblers, is not exactly a hometown player. Already critics are raising concerns that Mohegan’s Palmer casino may be used as a feeder for its Connecticut flagship, siphoning off revenue — and tax dollars — that would otherwise stay in Massachusetts. With no clear front runner in western Massachusetts, other industry giants are staking claims. Penn National and Ameristar Casinos have both targeted Springfield, the state’s third larg-est city, for a potential casino. Hard Rock International has zoomed in on another site a few miles up I-91 in Holyoke. Springfield and Holyoke are both hard-hit, post-industrial cities eager for development. But

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Springfield’s mayor has endorsed Mohegan’s Palmer proposal while Holyoke’s chief execu-tive has not given backing to Hard Rock’s casino plans. Still, would-be casino developers in Springfield may still stand a chance, with the legisla-tion also allowing them to skip a city-wide vote and simply win a tally in the neighborhood where they plan to build. Wait and see in Southeastern Massachusetts The part of Massachusetts with the least competition so far is in the Southeast. While the mix of old industrial cities like New Bedford, Fall River, Brockton and rural farm and cranberry towns is not as attractive as the Boston area, demographics are not the reason. Rather, the Massachusetts casino legislation all but gives the Mashpee Wampanoag Tribe a license if it can hammer out a state compact by the end of next July. It is an extremely tight deadline, especially with the tribe currently looking for a new site to build on after backing away from earlier plans to build in Middleboro. There is also the no small matter of a lawsuit by a would-be New Bedford developer, which is challenging the preference given to the tribe in the Massachusetts casino bill, blasting it as a racial set-aside. But the tribe may have the most powerful backer of any group of casino developers in Massachusetts, having hooked up with Asian casino tiger Genting. Like other would-be developers, though, the tribe’s biggest challenge may be winning a local referendum. Tough choices In the competition for casino licenses in Massachusetts, money is great but the ability to win over local officials and voters could prove as or even more crucial, according to some industry observers. Yet, the state casino commission, once the political battles are over and done with, will have its own challenges picking between the various bidders, according to industry ana-lysts. It will likely include some bidders inclined to promise the moon – and extravagantly expen-sive casinos — to win over state officials. Instead, state regulators should be careful to choose the best capitalized proposals with the most realistic chances of success, warned David Katz, an analyst at Jefferies & Co. “Those sales jobs can be hard to resist,” Katz noted. “At the end of the day, you want the property to be successful with an appropriate budget and an appropriate capital structure and operators who know what they are doing.”

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DoJ Opinion On Internet Gambling Unlikely To Be Reversed

13 Jan, 2012 / GamblingCompliance / Tony Batt

Even if President Obama is defeated in November and a Republican administration takes control of the Department of Justice, December’s legal opinion permitting expansion of Internet gambling in the United States is unlikely to be overturned, according to former DoJ officials.

“It is unusual and relatively rare for the Office of Legal Counsel [of the Justice Department] to reverse course on its interpretation of statutory questions,” said Steven Bradbury, who was the head of OLC from 2005 to 2009 in the Bush administration.

Bradbury, who practices law in Washington, D.C., is one of the attorneys listed as an ad-viser to the campaign of Republican presidential candidate Mitt Romney. Bradbury stressed he was not commenting on behalf of the Romney campaign.

On December 23, the Justice Department released an opinion by new OLC head Virginia Seitz saying the Wire Act of 1961 prohibits only the electronic transmission across state lines of communications relating to sports wagering.

There is nothing in the Wire Act to prevent a state from selling lottery tickets online, ac-cording to Seitz’s ruling.

“It’s a potentially significant decision because it narrows the department’s interpretation of the prohibition to sporting events and contests,” Bradbury told GamblingCompliance.

“OLC opinions are binding on the rest of the Justice Department so U.S. attorneys and the department’s criminal division can’t take a broader position,” Bradbury said.

As OLC head in October 2008, Bradbury issued an opinion saying it would be a violation of federal law for states to fully privatize their lotteries.

Seitz’s opinion reversed the Justice Department’s longstanding public position that the Wire Act prohibited Internet purchases of lottery tickets, but it did not contradict any previous decisions by the OLC, according to Bradbury.

“This appears to be the first time OLC has ruled on this specific issue,” Bradbury said.

John Elwood, a Washington, D.C. attorney who also worked at OLC from 2005 to 2009, agreed that Seitz’s opinion is likely to endure. “The ordinary thought is that there has to be a pretty good reason to overturn a decision even if it might be controversial,” Elwood said.

Elwood said he was impressed by the opinion’s disclosure that the Justice Department’s criminal division was ambivalent about relying on the Wire Act to enforce a total ban on Internet gambling.

The criminal division believes a total ban “creates tension with (the Unlawful Internet Gambling Enforcement Act of 2006) which appears to permit out-of-state routing of data associated with in-state lottery transactions,” Seitz’s opinion said.

Obama nominated Seitz to lead the OLC in January 2011 after the President’s first nomi-nee, Dawn Johnson, withdrew because of Republican resistance.

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Seitz wrote the Internet gambling opinion on September 20 but it was not released by the Justice Department until December 23.

The Justice Department did not return an e-mail asking why there was a delay or if it was linked to the simultaneous December 23 release of a letter to Senate Majority Leader Harry Reid of Nevada and Senator Jon Kyl of Arizona.

Reid and Kyl sent a letter to U.S. Attorney General Eric Holder on July 14 urging him to reiterate the Justice Department’s previously stated position that the Wire Act applies to all forms of Internet gambling to prevent states from continuing efforts to launch online wagering operations.

Instead, Assistant Attorney General Ronald Weich responded in the December 23 letter to Reid and Kyl that the Unlawful Internet Gambing Enforcement Act of 2006 does not apply to intrastate wagering “even if communications are routed across state lines.”

Seitz’s opinion not only enables states to pursue the expansion of their lottery opera-tions online, but also may fuel efforts in Congress to pass legislation allowing federal regulation of Internet poker.

“While the ruling clears up some confusion about the Wire Act and how it applies to online gaming, it also opens the door for more complications,” Republican Congress-man Joe Barton told GamblingCompliance in an e-mail.

Barton introduced a bill last June that would empower the Department of Commerce to oversee a national regulatory scheme for Internet poker.

“My bill is needed more than ever,” Barton said. “It creates one federal standard that protects the integrity of the game and the financial interest of players — while protect-ing American consumers from nefarious and predatory overseas gambling operations.”

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