by Hillary LaClair, Senior Editor February 12, 2009
The online casino industry as well as Nick Jenkins, who founded the person to person internet betting exchange Betcha.com, celebrated a victory on Tuesday when a Washington appeals court ruled that the website was not a gambling operation. Betcha management had never classified the website as a gambling facility, as it does not require its players to pay any losses incurred. A lower court did not agree, however, having ruled to the contrary of Tuesday’s victory in 2007.
Judge C.C. Bridgewater elaborated on the 2-1 majority decision, saying, “Because Betcha.com customers agreed in advance that participants were not required to pay their losses, Betcha.com was not engaged in ‘gambling’ as defined in the Gambling Act. Also, the listing of bets for a fee was not ‘bookmaking’ because bookmaking rests upon Betcha.com engaging in ‘gambling.’”
Since the implementation of the Unlawful Internet Gambling Enforcement Act, the online casino industry has had a number of websites looking to provide U.S. citizens with a loophole in order to legally accept wagers from them. In addition the Betcha, there have been such strategies as providing gamblers the funds with which to gamble, omitting the element of luck from the game and even charging a monthly subscription fee in place of a wagering system.
Bridgewater had also written in a statement that since the website required that its users “acknowledge and agree” that all wagers taken were “non-binding,” betters would not be under the impression that they would “receive something of value” when winning.
“Accordingly, there is nothing risked, which is the essence of both the common law and statutory definition of ‘gambling,’” the Judge continued.
Buffalo State busness law professor, Joe Kelly, says he was not at all surprised by the ruling, and its interpretation of what U.S. law considers gambling. “Criminal law must be strictly interpreted,” he said. “Any ambiguity is resolved in favor of the accused.”
In the 2-1 vote, both Judge Bridgewater and Judge David Armstrong ruled for the majority opinion, while Judge Elaine Houghton expressed her disapproval in writing. Some were taken aback by her dissent, as it seemed that she might favor the majority ruling and agrees with the basic premise.
“I respectfully dissent from my colleagues’ decision that allows Betcha.com to operate as it intends. And although, in my usual judicial course, I follow the majority’s cited statutory construction principles, I cannot do so here,” she writes. “Certainly the legislature did not intend that Betcha.com, while running its operation on foreign-based servers, could provide an unregulated platform for internet wagering that undoubtedly will result in unpaid wagers being collected through unlawful means. Most certainly this is not the result the legislature intended when it set forth its strong declaration of public policy against unregulated gambling. Thus, I dissent.”
Jenkins, along with Josie M. Imlay and Peter M. Abrahamsen, both employees at Betcha.com, were arrested and charged with violation of internet gambling laws in Louisiana after a state trooper accepted four bets under permission of the Washington State Gambling Commission. Jenkins served four days in a jail cell, until he was released and his case was dropped because he had complied with a set of conditions.
Jenkins had launched Betcha.com in June of 2007, calling it the “world’s first honor-based betting exchange.” It operates as a strictly person to person betting platform, and while users are to provide a credit card upon registration, they are not obligated to pay when they lose.
“We hope they will, of course,” reads a segment in the website’s Terms of Service. “Not because they have to, but because they should. In any case, bets made on Betcha carry no term, express or implied that winning bettors will be paid when they win.”
The website generated a revenue by placing a fee on every wager made, based on the amount that was wagered. Jenkins argued in court that because the company did not actually accept real money bets and that the bets were “non-binding,” it was legal to operate the gambling website in the U.S.
“That the criminal element can get involved in something like Betcha.com is a bit bizarre,” said Kelly.
Betcha.com will continue to operate, after having been shut down in July of 2007 – one month after opening its doors. It accepts virtually any wager from its users, ranging from sports and politics to weather and television shows. Betcha.com is not yet back up and operational, and it is uncertain when and if Jenkins will reopen his doors to the U.S. gaming public.
by Hillary LaClair, Senior Editor February 10, 2009
According to iMEGA, the Commonwealth of Kentucky filed a notice to appeal in the domain seizure case, in which the Court of Appeals had issued a 2-1 majority ruling that prohibited the confiscation of 141 internet casino gambling domains. Since the appeal was filed in January, the Commonwealth has asked for more time to prepare its case.
The Commonwealth has asked the Kentucky State Supreme Court for permission to extend the court hearing date so that it might add an additional 30 pages to its already 50 pages appeal. Kentucky will face-off against advocacy and net neutrality groups like iMEGA, the Electronic Frontier Foundation, the Center for Democracy and Technology and the American Civil Liberties Union. It was also requested that if another 30 pages were not permitted, that a 10 day extension be placed on the deadline to file the brief.
“They’re certainly within their rights to make their request, but they don’t really seem to be bringing anything new to the table,” said Joe Brennan Jr., chairman at iMEGA. “The motion is a repetition of the same arguments that failed in the Court of Appeals – that iMEGA is an ‘illegal gambling association,’ that we have no right to represent our members in court and that domain names are ‘gambling devices’ under Kentucky law. Those arguments didn’t work before, but maybe they feel the added volume of pages will overcome the flaws found by the Court of Appeals in their attack on our members.”
The online casino industry celebrated an historic victory in January, wherein the Supreme Court ruled that online casino domains were not considered devices. Not only did this ruling prevent the seizure of a large portion of gambling websites, but it gave the internet casino industry political clout against the UIGEA, which has criminalized internet gambling since 2006.
The chairman at iMEGA did not speak highly of the decision to appeal, and the frustrations of the advocacy group are beginning to be more apparent. “The Commonwealth’s attorneys might save some space if they drop this continued assault on our standing,” said Brennan. “Perhaps they might review Hunt v. Washington State Apple Advertising Commission, where the U.S. Supreme Court established the right of associations to stand in court on behalf of their members. Since that’s been a settled issue since 1977, I think it’s time for the Commonwealth’s attorneys to move on.”
It has been argued that Kentucky’s attempts to confiscate the internet casinos are nothing more than a display of protectionism against its horse racing industry, which the governor who initially launched the lawsuit has spent a great deal of time lobbying for. The U.S. is in continued negotiations with Antigua and the World Trade Organization for its blatant show of discrimination against offshore gambling facilities. The $21 million settlement agreement has yet to be completed, however, while the U.S. continues its assault on the industry.
by Hillary LaClair, Senior Editor January 24, 2009
Antigua’s attempt to collect on a $21 million settlement ruled by the World Trade Organization has continued to produce no results, although negotiations have resumed this week with U.S. Trade Representatives. While Antiguan Finance Minister, Dr. Errol Cort has repeatedly asked that his people be patient in waiting for the settlement, the country’s economy is in turmoil. The lead attorney in the WTO dispute, Mark Mendel, has finally spoken out.
It has become increasingly more difficult to reach Mr. Mendel, however, he agreed to an exclusive interview with MajorWager.com where he expressed his growing discontent with U.S. trade negotiations. Mendel says he will continue negotiations until he feels that no results can come from it. Because the U.S. has repeatedly failed to pay its debts, however given many deadlines, he suggests that the nation open some online casinos to U.S. players – while not providing full access – until the settlement is paid.
Mendel also believes that because of the expansion of online casino gambling offshore, further disputes with the WTO would lead to larger settlement rulings. “It has only gotten clearer that the United States does not prohibit remote gambling, per se, and that is has erected trade barriers against countries to protect its domestic markets. The UIGEA would never pass a review at the WTO.”
Mendel of course refers to online horse racing wagers, a form of internet gambling that is not prohibited by UIGEA regulations. Furthermore, the U.S. is home to the World Series of Poker, where players are openly sponsored by online poker rooms. The U.S. has continued to launch litigation against various offshore online casino operators, including those that exited the U.S. market as soon as the UIGEA was implemented.
Mendel says that he believes the online casino gambling market will remain available to U.S. players, and will expand domestically. The U.S., following its current trends, will continue to prosecute and discriminate against overseas markets, while protecting its own. Mendel describes the U.S.’s refusal to pay out on its debts as a “terrible economic warfare,” and feels the only route for Antigua if this behavior continues, is to open its market to the U.S.
Antigua faces a serious economic crisis as the nation is applying for a $30 million loan to create more jobs. Mendel notes that Antiguan banks have a strong case with the WTO whose decisions are heavily influenced by legislation which favors the island nation.
Mendel is hopeful that the new administration will alter its policies to favor offshore gaming in compliance with international free trade agreements. Meanwhile in the U.S., individual states have felt the effects of the UIGEA. New Hampshire has reported that online lottery credit card sales were blocked by the anti-gambling legislation. Because the banks are held responsible for upholding the UIGEA, many local stores have begun to refuse lottery sales by credit or debit card.
The loss of even domestic gambling sales has resulted in less school funding, while U.S. residents continue to access online casinos using third party payment methods.
by Hillary LaClair, Senior Editor January 22, 2009
Online casino gambling advocates may have celebrated too early this week when the Kentucky Court of Appeals ruled against the seizure of 141 gambling domains. The state of Kentucky will not agree to a cease fire on this one, as the legal team representing the Commonwealth filed an appeal in the matter of iMEGA v. Judge Thomas D. Wingate.
The court ruled that online casinos were not considered “gambling devices,” on a 2-1 majority decision. It was also found that the Commonwealth of Kentucky had no authority to prosecute a criminal action in civil proceedings. Governor Steve Beshear had initially filed the lawsuit to protect the horse racing industry that provides substantial financial backing to Kentucky.
“We’re not surprised that Gov. Beshear and Secretary (J. Michael) Brown filed their appeal,” said a confident Joe Brennan Jr., Chairman at iMEGA. “They both invested a lot of political capital in this suit. They likely feel they can’t back down.
“Their attorneys took this on a contingency fee-basis, and have reportedly sunk over a million dollars of their own money in the suit, and other suits like this that they reportedly prepared for other states. Without a win in Kentucky, it will be hard to get those other suits off the ground, and they’ll have taken huge losses on their own gamble.”
Beshear seeks to set a dangerous precedent with this appeal, not just for online casino gambling, but equally for net neutrality. The seizure of offshore domain names would leave the United States with a dubious authority to ban whatever contents it so chooses. iMEGA is not concerned that the appeal will change the ruling, as John L. Fleischaker, lead attorney in the case, has said.
“We feel very good with where we’re at right now,” said Fleischaker. “The Court of Appeals was very clear in its ruling that you cannot use Kentucky’s ‘gambling devices’ law to seize internet domain names, because they do not meet the statutory definition.”
In past World Trade Organization disputes involving the U.S., the U.S. was found guilty of more than one act of protectionism toward online gambling facilities, as horse racing remains the only form of wager that is accepted from the internet. A ruling in favor of the Governor would again set a dangerous precedent in cyberspace.
“The lower court and the Commonwealth also erred when they attempted to get a civil forfeiture remedy – seizing control of the domain names – by applying it to a criminal statute that provided no such remedy,” Fleischaker noted. “There has been no criminal prosecution, no conviction, and thus no right to seize the owners’ property. You just can’t mash together a civil statute and a criminal statute to justify your actions.”
The official date for the appeal hearing has not yet been set; however, there is speculation that it will take place in the spring of this year. It is also unsure if the hearing will interfere with iMEGA’s hearing at the U.S. 3rd Circuit Court of Appeal, scheduled to take place sometime in April.
by Hillary LaClair, Senior Editor January 21, 2009
President Obama put a restriction on all pending legislation from his predecessor’s administration, just minutes after being sworn into office. Unfortunately for online casinos, this happened one day too late. The UIGEA was permanently implemented on Monday – the day so many celebrated as George W. Bush’s last day as president of the United States.
Bush had banned all of Bill Clinton’s last minute regulations after coming into office. Obama followed this example, refusing to pass any midnight regulations until his administration had time to properly review them.
A press release from the White house yesterday revealed that “White House Chief of Staff Rahm Emanuel signed a memorandum sent to all agencies and departments to stop all pending regulations until a legal and policy review can be conducted by the Obama administration.”
Much to the dismay of online casino gambling advocates, William Wichterman had pressured the U.S. Treasury Department to complete the new text in the UIGEA by November 19th. By doing so, it was passed within the 60-day deadline for review.
There is still hope for online casino gambling, however. While the Congressional Review Act of 1996 only allows the administration to reconsider legislation passed less than 60 days prior to Obama’s taking the oath, new legislation is being considered that would enable Congress to overturn any midnight rules.
Dubbed the “Midnight Rule Act,” a bill proposed by Jerrold Nadler would allow the current administration to review regulations passed within the last three months of the prior presidency (see https://casinointensity.com/news_dtls.php?news_id=174).
In the meantime, the banking industry continues to express their disapproval of new UIGEA regulations which leave them in charge of enforcing criminal offenses. One of the many reasons that the regulatory act has been criticized by U.S. legislators is that it is too vague in defining what constitutes as “unlawful internet gambling.” Because even U.S. officials are unable to undertake the task of enforcing the law, it has been passed onto financial institutions that are equally as clueless.
The only comfort banks can take is that the regulations will not go into effect until December 1st. This will allow Congress time to either implement the “Midnight Rule Act,” or overturn the bill itself.
Obama’s first proclamation calls on the aid of every American citizen, and so the responsibility of fighting for the right to gamble falls also on residents of this nation. “…I, Barack Obama, President of the United States of America, by the authority invested in me by the Constitution and laws of the United States, do hereby proclaim January 20, 2009, a National Day of Renewal and Reconciliation, and call upon all of our citizens to serve one another and the common purpose of remaking this Nation for our new century.
“In witness whereof, I have hereunto set my hand this twentieth day of January, in the year of our Lord two thousand nine, and of the Independence of the United States of America the two hundred and thirty-third.”
by Hillary LaClair, Senior Editor January 17, 2009
With the Obama administration comprised of primarily Democrats, congressmen are seeking to reverse a number of conservative policies that would continue to impede on environmental and economic movements. A demand for the upcoming administration to apply the Congressional Review Act of 1996 in its decision-making process, may be a turn for the better when it comes to online casino gambling.
Among other changes, the Democratic Party aims to overturn regulations that permit citizens to conceal weapons in national parks and government-funded hospitals to refuse doctors that have performed or currently perform abortions.
The Congressional Review Act may not allow democrats to act quickly enough, and as such Representative Jerrold Nadler has asked for Congress to pass the “Midnight Rule Act.” This will allow legislatures to rewrite or overturn regulations that were passed in the last three months of George W. Bush’s presidency, including the reinstatement of the Unlawful Internet Gambling Enforcement Act.
Online casino advocates have asked for something similar in the final days of the prior presidency, and have found support from federal banking institutions. Because bank lobbyists have had a difficult time enforcing the UIGEA, due to the vague nature of the anti-gaming legislation, they are hoping that it will either be reversed or more clearly defined.
Senator Ron Wyden commented, “Congress is going to have to roll up its sleeves and review these midnight regulations, because it’s clear that they are part of a desire for the administration, as it heads out the door, to put some ideological trophies on the wall.”
“Congress needs to pass the Midnight Rule Act to give President-elect Barack Obama the ability to quickly reverse these policies and undo these last, right-wing gasps of the Bush administration,” Nadler added.
by Hillary LaClair, Senior Editor January 16, 2009
Things are moving forward in the iMEGA v. Keisler, et al court proceedings, where the Interactive Media Entertainment and Gaming Association will attempt to disprove the constitutionality of the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). According to iMEGA’s website, the U.S. 3rd Circuit Court of Appeals has requested that the advocacy group provide dates of its availability, so that the court may hear oral arguments in defense of the online casino gambling industry.
The Court given iMEGA lead counsel, Eric Berstein, a list of dates that are open for the case to be presented. The Federal Trade Commission (FTC) and the Federal Reserve will join iMEGA in the court room, to present further remonstrance against the UIGEA’s validity. Each group will attempt to convince the court that the Enforcement Act, in its preventing transactions between U.S. players and online casinos, has placed an unreasonable burden on financial institutions.
Additionally, the advocacy group has argued that the UIGEA is too vague in its description of what is considered “unlawful internet gambling,” to be enforced – especially by U.S. banking institutions and credit card companies. Even the Department of Treasury admitted last year that it was unable to efficiently define unlawful internet gambling.
“We’re very happy the Court is moving forward to schedule oral arguments,” said Joe Brannan Jr. of iMEGA. “We’re confident we have a strong suit, and it will be difficult for the Department of Justice to defend UIGEA, because it is so fatally flawed.”
The case will be brought before Judge Mary Cooper, who had previously ruled that had grounds for legal action. The official court date has not yet been announced, nor is it certain if a date has been set.
by Hillary LaClair, Senior Editor January 10, 2009
Despite the numerous amount of online casinos licensed an operated in Antigua and Barbuda, the two nations are facing the same economic recession as the U.S. Similarly, the country’s leaders have asked for loans to create a more fruitful work environment. What has Antigua in an uproar, however, is that the settlement agreed upon by the U.S. – that has yet to be paid – would more than cover the sought after loan.
The World Trade Organization ruled some time ago that the U.S. pay Antigua $21 million in damages caused when the U.S. placed a ban on offshore internet casino gambling. Although several deadlines have come and gone in the year since the ruling was made, the U.S. has continually failed to pay its dues. Every time that a deadline would pass, U.S. Trade Representative Susan Schwab would initiate negotiations with the country, rather than pay out on its debt. The rumors that the U.S. would build a military base to compensate for this debt were found to be untrue.
A spokesperson claims on behalf of Antigua that the country has applied for a $30 million loan from the Caribbean Development Bank to create more jobs and boost the economy. The financial crisis has apparently reached to a level of severity that may cause Prime Minister Baldwin Spenser to suspend income tax in order to bailout the island residents.
When one considers the U.S. national debt, and the money thrown away on needless endeavors, such as the space program, $21 million does not amount to much. The stubbornness of the current administration in refusing to pay its debt to Antigua has caused countless people suffering and impoverished conditions.
It is hoped that Schwab’s successor, Ron Kirk, will put an end to the charade. Kirk has always encouraged free trade to flourish in his legislative history. “Trade has been one of the only bright sports for the U.S. economy, and the Obama team is going to needy every tool in its tool box,” said U.S. Chamber of Commerce Vice President, John Murphy.
Millions of Americans owe their jobs to the U.S.’s ability to sell goods and services overseas or vice versa. In North Texas, where Kirk served as a mayor in Dallas, 425 foreign-operated businesses and multinational corporations account for more than 250,000 jobs. Many of these positions are the result of the international free trade agreement, which made it easier for Canada, the U.S. and Mexico to trade products and services. The payment to Antigua is not only vital to that nation’s survival, but to its own in terms of maintaining a healthy relationship with offshore trade markets. Additionally, the prospect of an legalized online casino market may prevent another WTO dispute, wherein it becomes the responsibility of the U.S. to pay for a failing economy.
In the next four years, Kirk’s negotiation and political skills will be put to the test. Antigua’s Finance Minister, Dr. Errol Cort, has exhibited an enormous amount of endurance throughout the negotiation process, asking for his people to have patience even during such economic turmoil.
The notion that U.S. Trade Representatives had reached a deal with Antigua that relieved the nation of a prior settlement, reported as fact by the Salt Lake Tribune, was found to be inaccurate. An article of December 26th, written by Cathy Mckitrick, told readers that the latest WTO negotiations ended in a settlement agreement on damages owed to Antigua in banning offshore online casino. This is not entirely true, however, as Mckitrick’s sources were more than a year old.
The article claimed the deal was not announced publicly because the U.S. had dubbed it a national security issue, and referred to comments made by Peter Riggs of the Forum on Democracy and Trade, wherein he shunned Trade Representativesfor keeping it secret. In turn, the article caused much speculation that a military base was to be built in Antigua in lieu of a $21 million settlement.
“In 2007, Antigua and Barbuda sought the ability to violate U.S. intellectual-property law in exchange for these restrictions.
Instead, the U.S. trade representative negotiated a different agreement, with concessions that have not been released due to "national security" concerns.”
An additional editorial was published in the Salt Lake Tribune on January 5th, which continued to report on the outdated trade agreement, as though it were current and relevant to the latest trade negotiations. Online Casino Advisory reports, however, that after researching the matter, their team was unable to confirm that this was true.
The team later contacted Mckitrick, who cited sources that were over a year old, and concerned an entirely separate matter between the U.S. and the European Union. The quote published from Peter Riggs had in fact, not pertained to Antigua at all. Had the article reported on the EU, rather than Antigua, it would have been factual, as the last WTO dispute ended in an undisclosed settlement. The EU is next in line for further WTO negotiations, however.
The article has caused the inaccuracy to be published in many media outlets – in online casino forums and international newspapers, including the Antigua Sun. Several attempts were made to gain insight as to why Mckitrick did not properly check her facts, but have so far been unsuccessful.
Online Casino Advisory reports, “This was brought to Mckitrick’s attention, but no retraction nor correction was forthcoming. Instead, as noted about the editorial, the Tribune continued to act as if the initial story had been flawless. Meanwhile, as reports continued to wind around the Internet, the Antigua Sun wrote about the possibility of an undisclosed deal.”
Mark Mendel, a legal representative for Antigua in the WTO negotiations has assured that no settlement has been reached, and that Antigua is still determined to collect on the $21 million that was promised, and to which several deadlines have not been met. Mendel claims that he does not trust the source of the rumors. It is uncertain how long the negotiations will continue, or whether they will extend into the upcoming U.S. administration.
Despite the recent alterations in the UK Advertising Standards Authority’s regulations, online casino operators continue to struggle in releasing appropriate adverts. The ASA has banned a Ladbrokes television advertising campaign because it allegedly links online casino gambling with “excessive risk taking.”
Two adverts came into question, as they display esteemed online casino gamers Willem Snyman and J “snake eyes” Kowalski reminiscing over dubious adventures as younger men. The first advertisement shows a young man diving with sharks with raw meat sewn to his adorned seal-like wet suit, while the other features a man sky diving with a parachute constructed of a potato chip package.
At the end of each commercial, viewers are prompted with the quip, “If only he’d seen Ladbrokes.com, his thrill buds would have been quenched.” The ASA felt that these adverts “portrayed gambling in a context of toughness,” or that it painted online gambling as an excessive risk.
Ladbrokes feels to the contrary, however, stating that the asinine nature of the advertisements set off any impression that the danger of gambling is appealing. “Ladbrokes fully supports the code of practice relating to gambling advertising but this ruling is an example of political correctness going too far,” said John O’Reilly, managing director at Ladbrokes. “The idea that an advertisement using absurd humor is somehow going to make gambling dangerously appealing is nonsense.”
The online casino has responded to the banning of their ad campaign, with a full page print in The Sun newspaper. The advertisement, directed at the ASA, depicts a photoID kit and the headline, “Missing: A Funny Bone.”
