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If you’ve watched the i-gaming industry for any time, you know that Superbowl and March Madness timeframes are when the law enforcement entities typically trot out new indictments, arrests or other law enforcement announcements as they try to remind Americans that “illegal internet gambling” is a problem. This year was no different when the Department of Justice offered up a guilty plea by David Carruthers in the BetOnSports case.
Watching the news conference with US Attorney Catherine Hanaway, I continued to be struck by the “victims” references to those players who lost money on deposit with BetOnSports. Unfortunately, some of the mainstream media in attendance (who may not be as familiar with the industry) parroted those terms themselves. But, others picked up on the situation and realized that, had the DoJ not seized all the assets and essentially shut the company down, those players would not be in this situation. One local TV reporter even asked her if it should be legalized and taxed. (Hanaway was quick to point out that she’s no longer a legislator and works for the government now.)
In the court documents, they say that they’ve seized over US$180M in assets (mostly from Gary Kaplan and his array of relatives in the operation). If player protection is truly a concern, it will be quite interesting to see if and how the US
But, there are some interesting lessons learned in this process and please forgive me the sports analogies.
Piling on: It’s become clear in watching this case as well as other federal cases with some folks I know (not in the industry) that the federal government has almost infinite resources to use when they want someone. In Carruthers’ case, his first charge was a single racketeering (RICO) charge. But, by the third superseding indictment, the charges had mushroomed. In the end, the single count that he pled guilty to in that third indictment was over 8 pages long and included the kitchen sink.
Interference: That’s clearly how the US Antigua US
Holding: I don’t know how many times folks (US citizens but mainly not) have asked about the misnomer of a “speedy trial”. I was surprised those not living in America
One of the most amazing things I’ve learned about the US
It’s been interesting to see the comments and reactions to this development. Our friends at Covers decided to write their own spoof of a DoJ news release about the plea agreement. While not completely accurate (they obviously had the same flawed thinking about house arrest), it does reflect the thoughts of many in the industry. It reads as such:
Carruthers was a British citizen working for a publicly traded UK company, BetOnSports, and yet he was still arrested and prosecuted in America for participating in a business that is considered legal in most of the free world. America America
Because of his arrest, BetOnSports, a once-thriving company, was forced to close operations and was unable to pay off the accounts of many innocent users due to the legal situation.
The US Attorney's Office in the Eastern District of Missouri spent untold sums of taxpayer dollars harassing and prosecuting Mr. Carruthers, in the hopes of attaining a lengthy conviction. The fact that he is likely to be sentenced to little more than time served is an embarrassment to all attorneys involved.
This situation likely reflects little more than the District's desire to wrap up this matter before
God Bless
Ironically, as we watched this saga play out in a courtroom in St. Louis
"The Department of Justice must always ensure that any case in which it is involved is handled fairly and consistent with its commitment to justice," Holder said in his statement.
Well, that’s a start and not too much to ask of our “Justice Department.”
For those of you who have been in the i-gaming world for a while, you know that our Aussie friends are among the most fun-loving on the planet. And, unfortunately, we recently heard that one of our favorites, Geoff Sheehan, from Down Under just passed away unexpectedly from cancer.
Geoff has had several incarnations in our business from his home base around Brisbane. One of the most notable was his stint running the online gaming operations for the government of Vanuatu, a licensing jurisdiction in the South Pacific.
I never tired of finding a fresh audience for Geoff to tell his story of the inauspicious online launch of PBL’s www.crowngames.com in January 4, 2002. As Geoff narrated the story, the launch was just to begin as the island awoke to a 7.3 magnitude earthquake. He hurriedly dressed and was driving to the hosting facility on lowland by the airport. He grew more and more concerned when many of the natives he passed were literally running for the hills after the earthquake. Having seen the power of the subsequent tsunami in that part of the world, we all know now just why those folks were running for high ground.
Our condolences to Kelly Signell, Geoff’s long-time partner and friend, as well as his family. To see more about the fun-loving Geoff, you can read his page at http://geoffsheehan.com/about-2/
Betting operators have always found ways to push the boundaries. Take for example Stanleybet's recent Greek shop venture. Tom Lippiett, an associate with Berwin Leighton Paisner L.L.P. in the United Kingdom, believes this kind of boundary pushing in the European Union will be one of the hot topics at next week's BetMarkets.
LISTEN
Remember last month when the Daily Telegraph ran a headline linking terrorism to online gambling? Business leaders in the I-gaming space were not pleased, and Leon Thomas, head of regulatory compliance for PartyGaming, says it's time for the industry to confront the "anti-online gambling brigade." An industry-wide media campaign to do just that is in the works, and Thomas presented the case in London at the Combating Cybercrime in Gaming & Betting conference. He also took a few minutes prior to his presentation to break it down for Gaming Industry Media.
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A busy day that, like all conference days, was filled with information, opinion and rumor.
To begin, the mobile gambling presenters maintained a modest, wait-and-see stance on growth prospects for their sector. It was recommended that figures from Juniper Research, for the umpteenth time, be taken with the world's largest grain of salt.
The Apple iPhone was the subject of much discussion, and nearly every chief executive I spoke with today had a different opinion on the popular device. (The London Telegraph reported recently that Apple sold around 17 million of them in 2008.)
Matti Zinder of Spin3 said that V.I.P. players will gravitate toward the iPhone and are intriguing sources of income, while Christian Rajter of Mobenga said the iPhone is valuable because, by virtue of its interactive features, it encourages consumers to learn more about how mobile devices function.
The quote of the day no doubt belonged to Mr. Rajter:
"I was attending the Mobile World Congress last week, and the big talk of the conference was Apple, Apple, Apple -- iPhone, iPhone, iPhone. And the fascinating thing: Apple wasn't even there. It's a bit cheeky, but I like it. It's a bit like saying, 'You need us, but we don't need you.' "
One large hurdle that remains for the prospective iPhoneGambling Leverager: The App Store, where the device's applications are sold in downloadable form, is off limits for gambling apps. (I'm no iPhone user, so forgive me if I feel woefully uncool when using the word, "app.")
Spin3 has developed a workaround, though. Its games run on a browser-based platform, which, to the tech layman like me, means they simply run within one's browser: no download required.
Probability attempted developing a browser-based game, iPhone blackjack, but the company's chief executive, Charles P. Cohen, said about the project a few months ago: "It looked cool, but offered only a world of pain when it came to security, resilience and marketing. I know other people are trying it, and I wish them luck; they'll need it."
I've always wondered what happens when your game is interrupted on a mobile -- through a lost signal or incoming call, for example. And Mario Galea, the former head of the Maltese Lotteries and Gaming Authority, said that mobile devices are still regulatory head-scratchers for this and a number of other reasons.
Meanwhile, Marcel Puyk, the chief executive of Cellectivity, said that for mobile gambling in Asia, it's better now to be a b-to-b provider than a b-to-c operator because government monopolies -- like Singapore Turf Club -- present commercially interesting partnership opportunities. He said, though, that the tendency of those monopolies is to want to develop their solutions in-house.
Fun fact: I spoke with Gilbert S.C. Kwok of the Hong Kong Jockey Club, and he said the operator -- one of China's longest running -- has a number of mobile options on offer now.
Random thought: Mr. Puyk picked Vietnam as the Asian market most likely to support regulated mobile gambling in the coming years.
Both Mr. Rajter and Mr. Puyk welcomed the uptick in investment activity from operators in the recent past, and said that staffs specifically dedicated to the mobile end of things are finally being established at their respective partners.
Mr. Puyk picked 888 Holdings as the most likely in the listed sector to invest in marketing a mobile offering in the near future. "There's a lot of imagination there," he said.
Totally unrelated to mobile gambling, but a theory I've not heard before was laid out to me by Charles H. Gillespie, the chief executive of World Sports Network: Online mah-jongg just isn't working.
He argued that a substantial amount of time and money has been invested in taking mah-jongg online with little to show for it all. He added that the game has still to overcome problems with collusion, player constraints (there must be exactly four to have a game), and lengthy sessions (which means, for example, that less rake is being generated per hour).
Poker, a game he played professionally before founding World Sports Network, is one he thinks is well-suited for the Internet, though he was reluctant to guess at its growth potential in Asia.
In news unrelated to Asia, James Hollins, an equity analyst with Daniel Stewart & Company, published a note this morning advising clients that a new bill from Barney Frank, the Libertarian Massachusetts Democrat, could be introduced as early as this week. No word from our chief lobbying contact in Washington, D.C., so make of that what you will.
Finally, CryptoLogic Ltd. considerably upped the ante Tuesday in its dispute with former Chief Executive Javaid Aziz. The company released a series of strongly worded e-mails, by Mr. Aziz, to the directors of CryptoLogic that are the stuff tabloids fuss over.
More on this to come, but the dispute, I think, is fast approaching a point where any sense of objectivity will become lost in the mudslung minutiae of legalese.
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