Monthly Archives: April 2012

Weekly industry report: Malta and Ontario agree to share info; EGBA offers manifesto for a European policy

Posted on April 27, 2012 by Bradley Vallerius| Comments Off

Highlights include financials from 888 and  IGT, an information sharing agreement between regulators in Malta and Ontario, and an EGBA manifesto for a European approach to remote gambling policy

Trade show in California

Hundreds of people attended the Global iGaming Summit & Expo (GiGSE) in San Francisco, California this week. California is one of the states leading the way toward progressive internet gambling legislation, and the San Francisco Bay region is home to some of the country’s most talented software companies. A look at the program agenda reveals prevalent themes and questions in the gaming industry today. Legislators from California and other states spoke at the event, and hopefully stayed a while to learn some things.

To read the perceptions of attendees on Twitter, search Twitter for #GIGSE2012. A few of the attendees gave thorough accounts of what they heard in conference sessions and what they experienced generally throughout the course of the three-day program. These include Chris Krafcik of Gambling Compliance, Scarlet Robinson of The Innovation Group, Vin Narayanan of Casino City, and Victor Rocha of Penchanga.net.

Identifying customer location

Cantor Gaming, an affiliate of Cantor Fitzgerald that provides remote gaming and betting technology, has contracted with LocAid to verify the location of customers using its mobile products in the U.S. Identifying customer location is important because ultimately the law of the state in which the customer is physically located controls. See VentureBeat article: Spoof-proof location authentication to help legitimize mobile gambling.

Regulatory information sharing

The regulatory authority for gambling in the Canadian province of Ontario (Alcohol and Gaming Commission of Ontario) has entered into an agreement with the regulatory authority for gambling in the Mediterranean country of Malta (Malta Lotteries and Gaming Authority). The Memorandum of Understanding between the two agencies stipulates terms and conditions under which they will share information with each other.

According to an article on Tax-News.com:

“The MoU with the Alcohol and Gaming Commission of Ontario provides for the exchange of information on eligibility assessments of applications as well as compliance and regulatory assurance activities with respect to gaming. Both jurisdictions have also agreed to possible joint, cooperative and collaborative inspections, investigations and enforcement activities.”

Malta’s Lottery and Gaming Authority has entered two additional agreements for the sharing of information in recent days with the European Sports Security Association and FIFA.

European competition issues

The European Gaming and Betting Association has published a manifesto containing a policy plan for remote gambling that it would like to see implemented across all of Europe.  The major issues in Europe are concerned with how to control competition among all of the member states. Part of the problem is that some member states allow for the licensing of an unlimited number of operators while others let only one or two government controlled operators into the market. EGBA’s membership consists of private enterprise operators.

Secretary General of EGBA, Sigrid Ligné, said:

“Our Manifesto is designed to be a timely input to the [European] Commission as it prepares its EU action plan for online gambling. We are calling for the introduction of European rules to ensure proper protection for consumers while affording fair and transparent licensing conditions for EU operators.”

The Manifesto declares that an effective EU framework to regulate and ensure responsible online gambling should be based on 5 priority actions:

  1. The European Commission fulfilling its role as Guardian of the Treaty.
  2. Structured regulatory cooperation among national authorities.
  3. An EU legal framework for online gambling.
  4. Problem gambling prevention measures based on evidence.
  5. EU action to fight sport fraud.

For an article explaining why United States policy for internet gambling will likely avoid the cross-border problems that plague Europe, see: States’ Rights and Fragmented Internet Gambling Markets, Nov. 2011, by attorney Bradley Vallerius.

888 Financials

888 Holdings PLC released its key performance indicators for the first quarter of 2012. Overall revenue for the quarter was $94 million, a 4% increase over Q4 2011 and a 25% increase over Q1 2011.

888’s CEO Brian Mattingley said:

“Our focused strategy has led to another excellent quarter, with ongoing strength in Poker driving March to the highest ever monthly revenues in the history of 888. Poker has continued its robust performance in the early stages of Q2, with our other product areas seeing an expected return to seasonal patterns. As stated at our full year results, there are significant growth opportunities offered by the liberalisation of new markets, which will take investment to realise. We will continue to invest throughout 2012 in order to buildmarket share.”

IGT Financials

Interactive Gaming Technology released its results for the second quarter of fiscal 2012. Total quarterly revenue reached $541 million, a 13% increase over the same period last year. Revenue from gaming operations increased 11% to $300 million in the second quarter, “primarily due to increases in the interactive businesses and installed base.”

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Posted in Business News, Uncategorized, Weekly industry report

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Standards published for the control of problem gambling on the internet

Posted on April 24, 2012 by Bradley Vallerius| Comments Off

 On April 23, the National Council on Problem Gambling published a set of standards it feels should be a part of all regulatory systems for internet gambling.

The National Council on Problem Gambling (NCPG) does not advocate that internet gambling should be prohibited. Instead, the organization argues that legalization of internet gambling should be accompanied by standards which mitigate the negative social effects of gambling.

“The most ethical and cost effective response to gambling addition issues raised by internet gambling is a comprehensive public health strategy that includes prevention, education, treatment, enforcement  and research services,” according to NCPG.

NCPG developed its standards after studying gambling regulatory codes from around the world and gathering empirical evidence and feedback from experts in the field. The organization also considered laws covering the online purchase of other age-controlled products such as alcohol and tobacco.

NCPG is an important political player because it is the largest organization that lobbies for programs and services to assist problem gamblers and their families. NCPG spokespersons are frequently invited to offer testimony to Congress and state legislatures.

NCPG’s “Internet Responsible Gambling Standards” are contained in a brief 7-page document (.pdf).

Below is an outline of the standards:

  • Policy
    • Policy commitment to responsible gambling
    • Strategy for responsible gambling
    • Support
  • Staff Training
    • Corporate policy
    • Training
  • Informed Decision Making
    • Information about gambling
    • Personalized information
    • Limit setting
    • Time out
  • Assisting players
    • Policies
    • Responding to information requests
  • Self-exclusion
    • Self-exclusion
    • Self-exclusion policies
    • Exclusion length
    • Communication with players
    • Access to help
    • Conditions of exclusions
    • Enforcement
    • Reinstatement
    • Renewal
  • Advertising and promotion
    • Advertising policy statement
  • Game and site Features
    • Passage of time
    • Display cash
    • Game features
    • New features
    • Registration
    • Multiple accounts
    • Free games
    • Encouragement to retreat
    • Underage gambling
    • Credit
  • Research
    • Transparency

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Posted in California, Connecticut, Nevada, New Jersey, Tribes, U.S. Federal

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Utah prohibits internet gambling; turns poker players into criminals

Posted on April 6, 2012 by Bradley Vallerius| Comments Off

The State of Utah has enacted a law that extends its prohibition on real world gambling to games played on the internet. The new law makes it a crime both to offer internet gambling to a player located in Utah and to participate in a game as a player located in Utah.

The new law functions by amending Utah’s Criminal Code with a definition for “internet gambling” and providing that a person is guilty of the already existing crime of gambling if he participates in internet gambling or provides it to a person located in the state. As a matter of legislative drafting, it took very few words to accomplish what the drafters intended.

The criminal penalty for a player who participates in internet gambling is the same as for a player who participates in real world gambling. The first offense is a class B misdemeanor (up to six months in jail and/or a fine of up to $1,000), and the second offense is a class A misdemeanor (up to one year in jail and/or a fine of up to $2,500). Any operator of an internet gambling service who knowingly offers internet gambling to a person located in Utah is guilty of a class A misdemeanor.

The new law recognizes that internet service providers and hosting companies may incidentally route data across the state without actually making the data available to a person located in Utah, and there is therefore an exception relieving communication carriers of criminal liability under the statute.

The new law takes effect July 1, 2012.

(See the Act in bill form as Utah H.B. 108).

Comment:

A common criticism of Utah’s new law is that it is a step in the opposite direction of progress. The assumption underlying this criticism is that the states should move toward regulatory frameworks that balance the protection of personal freedoms against the need for appropriate consumer and community protections.

However, progress also entails restoring the states’ rights to make and enforce their own decisions for the safety and welfare of people located within their territory. Over the next several years many state legislatures will decide to legalize internet gambling. In all states the enabling acts and regulations will provide substantial precautions against the perceived social risks associated with gambling. Some of the most easily recognized precautions come in the form of high tax rates, wagering limits, and advertising restrictions. Each state may very well make different decisions about how minimal or extensive these precautions should be.

Nevada, for example, has traditionally made gambling opportunities widely available throughout its territory. It was entirely consistent with Nevada’s traditional values when last year the state legislature became the first to enact a statute legalizing “interactive gaming.” Utah, on the other hand, is one of only two U.S. states which statutorily prohibit all forms of brick-and-mortar wagering. For the legislature in Utah, no amount of regulatory precaution is sufficient to justify exposing the community to the potential risks of gambling. As in Nevada, the legislature in Utah has acted consistently with the state’s traditional values with regard to gambling on the internet.

It is important that the states reclaim their right to make and enforce their own rules for gambling on the internet. It is not Constitutionally appropriate to apply a uniform set of rules to all of them. A state like Nevada must be free to regulate internet gambling as much as it reasonably believes desirable, but that means that a state like Utah must also must be free to restrict internet gambling as much as it reasonably believes desirable.

But prosecuting the player?…

Prohibiting internet gambling by making the operator a criminal is one thing, but making the player a criminal is another. It is difficult to prohibit an activity unless you sanction the player, but some might call it contrary to American values.

Consider the following statement by former Attorney General Robert F. Kennedy, supporting the Wire Act of 1961because it was carefully tailored so as not to criminalize common bettors.

“It should be clear that the federal government is not undertaking the almost impossible task of dealing with all the many forms of casual or social wagering which so often may be effected over communications. It is not intended that the act should prevent a social wager between friends by telephone. This legislation can be a most effective weapon in dealing with one of the major factors of organized crime in this country without invading the privacy of the home or outraging the sensibilities of our people in matters of personal inclinations and morals.”

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New Jersey S1565 passes Senate budget committee

Posted on April 4, 2012 by Bradley Vallerius| Leave a comment

A bill to license and regulate internet gambling within the territorial borders of New Jersey easily passed a vote by the State Senate’s Budget and Appropriations Committee on April 3 by a vote of 11-0 (with 1 not voting and 1 abstention).  Now the bill heads to the floor of the Senate.

Senate Bill 1565 seeks to legalize internet gambling by way of supplementing New Jersey’s Casino Control Act with provisions related to the regulation of games on the internet. Casino games and poker would be permitted but not sports betting. The only entities that would be allowed to operate games on the internet are licensed Atlantic City casinos.

Sponsored by Senators Raymond Lesniak and Jim Whelan, S1565 is very similar to a bill that moved swiftly and easily through the legislature last year but failed to become enacted after Governor Chris Christie refused to sign it. In recent weeks there has been much speculation in both industry journals and mainstream media as to whether Governor Christie might now be ready to sign an internet gambling bill, but his office has not issued a statement on the matter.

No action on S1565 has been scheduled on the floor of the Senate yet, but a vote seems certain.

Legalized Games

S1565 would enable licensed Atlantic City casinos to operate all of the same games on the internet that they operate in their brick-and-mortar casinos.

Eligible License Applicants

The only entities who would be able to operate internet gambling in New Jersey are licensed Atlantic City casinos. Operators would be required to locate all equipment for conducting internet wagering in a secure location in Atlantic City.

Taxes and fees

Operators would be taxed at 10% of gross revenues from internet wagering. This compares to an 8% tax on gross revenues from brick-and-mortar operations.

The initial license fee would be at least $200,000 and then subsequent annual renewal fees would be $100,000.

Agency Duties

New Jersey’s Division of Gaming Enforcement would be responsible for recommending internet wagering regulations to New Jersey’s Gaming Control Commission. Additionally, the Division of Gaming Enforcement would create an Office of Internet Wagering to perform duties related to internet gambling regulation.

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Posted in New Jersey, Uncategorized

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What rights do tribes have in internet gambling?

Posted on April 2, 2012 by Bradley Vallerius| Leave a comment

“Even if there were no tribes in the United States, adopting appropriate legal rules for internet gambling would still be a difficult endeavor….”

I recently wrote an article for Tribal Government Gaming magazine in which I try to answer the question of what rights belong to Indian tribes with regard to participating in U.S. markets if a state or the federal government were to legalize internet gambling.

I conclude that each of the 50 states has the power to make its own decisions any way it reasonably believes appropriate. In some cases, a legislature might determine that allowing only one or two operators is the appropriate solution for managing policy concerns about the potential social costs of gambling. In some states, the preferred operators will not be a tribe. But in others, such as California and Connecticut, tribes can make a great case for being the state’s most qualified operators.

Furthermore, in the event that Congress were to enact a federal network for internet gambling, then tribal operators should probably be able to participate as freely as operators licensed by the states.

You can read the complete article online at Tribal Gaming Government magazine.

 

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Posted in California, Connecticut, Tribes, U.S. Federal

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