A group of organizations in opposition to the Kentucky court proceedings in which 141 online casino gambling websites may be confiscated, participated in a discussion and press conference hosted by the personal freedoms body, the Bluegrass Institute.
A plethora of industry media and legal representatives attended, some of which were the Associated Press, iMEGA, the Poker Players Alliance, Americans for Tax Reform and the Media Freedom Project, Lexington television outs WTVQ and WAVE 3 TV, the Internet Commerce Association and local CBS, NBC and ABC representatives.
Among the arguments against the seizure, legal representatives have added that the US domain registrar GoDaddy had fully complied with an order previously made by the Frankfort Circuit Court to release a handful of domains while the case was pending. It has also been brought to light that the Kentucky Governor Beshear is practicing commercial protectionism in his attempt to hi-jack international internet gambling domains.
Edward James Leyden, an attorney representing iMEGA states, “Nobody has been as reckless as Kentucky has on this. Here’s how I react to it: Governor Beshear needs to read the Constitution.” Leyden noted the Kentucky lottery (sometimes played online) and the Kentucky state Internet-based horse race betting operation,TwinSpires.com.
“I guess the perception is it’s just out of staters and it’s just people who aren’t here in Kentucky, and then it’s a free ride,” added Leyden.
The Poker Players Alliance, one of the strongest and most active pressure groups in the industry, has sent some 1,800 letters from its members. The organization argues that poker should not be considered illegal gambling because it requires more skill than it does chance. The PPA has recommended that its members, when writing to State officials, maintain that “Poker is not gambling, nor is it a crime. Poker is a game of skill that was unfairly and improperly included in this action, and I request the immediate removal of the poker-only sites from your list of domains to seize.”
iMEGA is not satisfied with just the removal of online poker sites, however. Its website has posted a statement that reads, “Should the actions of Kentucky’s chief executive stand, the harm to Internet freedom would be immense. What a powerful weapon would be placed in the hands of government: to arbitrarily seize politically, religiously, or culturally-based Internet domains that may run contrary to the views of those in power.”
Derek Hunter of the Media Freedom Project told WTVQ, “This is a dangerous step in regulating what people can and cannot access on the Internet. Who is to guarantee it will stop here?”
Jim Waters of the Bluegrass Institute added, “What happens is being watched across the world. People in Kentucky haven’t even had the opportunity to express their views to elected officials.”
The proceedings will continue on Tuesday. Should the court rule in favor of the domain seizures, online casinos will sustain a crushing blow; not only in the loss of the US market, and the temporary closure to its overseas users, but also in the outrageous fines that Kentucky is demanding for the websites to begin operating again.
The multitude of defendants in the court proceedings against Kentucky has seized the opportunity to file briefs with the court, explaining their position on the attempt to seize 141 international online casino gambling domains.
One Lexington Attorney, William C. Hurt Jr. has filed his claim, stating however that the Kentucky Justice and Public Safety Cabinet has the legal right to seize these domain names on grounds that they are “illegal gambling devices” and are therefore subject to Kentucky law. This presumptuous statement would imply that Kentucky law has jurisdiction even over domains that are licensed and operated out of foreign countries where online casino gambling is legal.
Defense attorneys have prepared rebuttals, saying that the use of the word device pertains to a “piece of equipment or a mechanism designed to serve a special purpose or perform a special function,” and that a domain name does not fall under this category.
Additionally, the super team contesting that the seizure is unconstitutional, have made efforts to gather and discuss the matter on Monday at the Capital Plaza Hotel in Frankfort. The group is headed by the Bluegrass Institute whose purpose is to research whether or not policy issues contribute to its ideals of limited government, economic prosperity and personal responsibility as defined by the founding fathers.
A Bluesgrass spokesperson told the Associated Press, “This is certainly moving in the wrong direction. This is unsound public policy. The Governor is trying to curb Internet gambling, but I don’t think he knows that the Kentucky Lottery allows second chance tickets to be played online. How hypocritical and inconsistent is that? In total, this is going to set a really bad precedent for other states and even other countries.”
The Poker Players Alliance has been more active than perhaps any other pressure group in the hearing, having already filed its briefs with the court.PPA members have challenged that online poker domains should be included in the list of potential domain seizures, as they contend that poker is a game of skill more than it is a game of chance.
Barry Kaufkins of the BG Daily News has had much to say on the issue as well, claiming that the Governor has supported other forms of gambling in the past, including his lobbying for more land casinos to be erected in Kentucky.
“Contrary to the governor’s claims, online poker is not illegal under Kentucky state law, and internet poker is fully regulated,” said Kaufkins. “Nor is it true that online poker is untaxed – poker income [as well as casino income] is taxed at the state and federal levels. The industry itself is not taxed because Kentucky chose to not levy a tax.
“The industry is not regulated by the Commonwealth only because Kentucky has chosen not to license and regulate [gambling] sites. Were Kentucky to do so, I believe the poker sites would jump at the opportunity and I fully support legislation to implement this.
“I am outraged that our governor feels he has the right to censor my online activities, to invade my privacy by regulating what I do in the sanctity of my own home. This kind of mommy government censorship is the kind of public policy I would expect in China, not in the United States.”
iMEGA (Interactive Media Entertainment and Gaming Association) is far from finished with the Unlawful Internet Gambling Enforcement Act, as the internet freedom pressure group has taken further legal action against the bill. Following the last hearing in which iMEGA was gained a good deal of political clout, the organization has filed its brief with the US Court of Appeal, 3rd Circuit, in the case of iMEGA vs. Keisler, et al. iMEGA intends to illustrate the unconstitutionality of the UIGEA by arguing the inability of banking institutions to enforce the bill, the unclear definition of illegal gambling, and the hypocrisy of the actual bill itself.
As has been said time and again, the UIGEA has prohibited financial systems from processing transactions between U.S. players and the online casinos gambling websites they use. The bill puts the unnecessary burden of enforcing the law on banking institutions that have no legal standing, training or capacity for.
“This is a very simple argument on which we ask the Court to overturn this law,” reports Joe Brennan Jr., CEO and chairman to iMEGA. “The UIGEA should be ‘void for vagueness,” in that Congress has not defined what an “unlawful internet gambling transaction” is, as they are required. Congress cannot delegate that necessary determination as to what is ‘lawful’ or ‘unlawful’ to US banks and credit card companies.
“The Department of Treasury, which has been tasked with drafting the regulations for UIGEA, has testified before Congress that they themselves cannot make that determination. Because Congress refused to draft necessary standards, the law is so inherently flawed as to make it totally vague and unenforceable, and we are confident that the Court will overturn it.”
iMEGA’s appeal is crucial to the industry, which has faced substantial losses from the US market following the UIGEA’s implementation. If the bill is overturned, the revenue that the US could generate from online casino gambling would equal around 6 billion per year; let alone the billions that would be saved in international trade disputes that the US is currently involved with.
The litigation follows a ruling by Judge Mary Cooper who gave iMEGA legal standing to fight the UIGEA on behalf of its members and the online gambling industry, although having previously dismissed their case.
The pressure group has enlisted the representation of lead counsel Eric M. Bernstien of Bernstien and Associates, Stephen A. Saltzburg of George Washington University School of Law and Edward J Leyden, iMEGA president and general counsel.
It seems that the Norwegian government may soon be implementing policy very similar to the UIGEA. A proposal to cease online casino gambling financial transactions was sent to Parliament by Trond Giske this week for legislators to vote on. If the Norwegian government were to vote in favor of the initiative, Nordic banks and other financial institutions will face criminal charges upon processing a payment for online gambling.
Giske, the Minister for Culture and Church Affairs made several efforts in 2006 to eradicate all land based slot machines aside from those operated by the state monopoly, Norske Tipping.Since then, Fiske has turned his attention to internet gambling. Where the proposal differs from the U.S. is that online casino gambling is not illegal in the States, but rather the financing of such. Under current Norwegian law, marketing, promotion or facilitations of internet gambling is prohibited by law. Giske intends to extend this prohibition to payment processing with his proposal.
The amendment underwent legal drafting in February of this year where it was referred to as a proposal of clarification. As this wasn’t enough for some adamant anti-gamblers, there has been a high demand for the amendment to go so far as to block IP addresses from online casinos and other gambling websites.
The proposal isn’t sitting well with the European Union, however. The EU, already in a dispute with the U.S. over discriminatory policy over internet gambling, has watched its progress from the sidelines. Norway is not currently a fully functional member of the EU, it does profit from the EU market and EFTA. Rumors circulate that the passing of this law could lead to further legal disputes with the European Union.
According to research in Norway, 1.5 percent, or 71,000 citizens, of the Norwegian population are “problem gamblers” and that 133,000 citizens may be at risk. Additionally, the average gambling addict spent 5,000 Euro per year on gambling. This will no doubt be used by Giske to earn votes on his amendment. While 244,000 Norwegians had gambled on the internet last year, the revenue of which amounted to 961 million Euro, 48 percent of them preferred to play the Norwegian Lottery. Online poker was the second game of choice at 28 percent, closely followed by sports betting at 27 percent. Finally, casino games were preferred by 7 percent of the internet gambling population. This will no doubt be used by Giske to earn votes on his amendment, while Norske Tipping will remain protected.
For a man who so strongly opposes the “immorality” of offline and online casino gambling, the Associated Press reports that Representative Spencer Bachus has made a number of investments in stocks that were plainly affected by Congressional activity and the Financial Services Committee – a committee in which he is an active member.
Bachus is very well known in the industry as a politician that has made extreme efforts to criminialize internet gambling due to its immoral nature. According to Online-Casinos.com, “while many members of Congress hold long-term positions in the stock markets, day trading on stocks directly influenced by Congress is considered both unusual and inappropriate, if not illegal.” The Congressman’s trades have mostly been puts or calls, signifying an expected quick stock adjustment, a common insider trade bid.
Yet, Bachus for all of his opposition to things immoral has on many occasions traded and quickly sold shares in companies that were impacted by activity in Congress, some occurring in less than a week. The Alabama Representative refused to comment on the issue. Instead he relied on his spokesperson to speak for him – insisting that because Bachus had never invested in banking or financial institutions he was within his legal rights.
Law Professor at Duke University, James Cox, who specializes in corporate law – and more importantly, the consequences of insider training – told the Associated Press, “We get very upset about baseball players and other sports players and other sports players who gamble…because we’re worried about the temptation that they might bet on their own games. I think this is the same problem.”
The talks that took place in Washington this week between a European Union delegation, US officials and USTR officials involving the further disputes made against the US for its discrimination against overseas gambling facilities did not go well, the Reuters news agency reports. Little was said the move the case forward, business as usual for U.S. trade delegates.
Moving in the same direction as every other trade dispute with the U.S., the American Trade Representative’s office refused to change its outlook or policy on overseas gaming, and any EU efforts to argue that the U.S. shows domestic favoritism, were immediately “rebuffed.”
An official statement is yet to be made, but many speculate that the dispute is most likely to end in an expensive WTO legal confrontation. If the EU involves the WTO, showing the substantial loss they’ve suffered because of the U.S. discriminatory enforcement, the expenses will be severe.
According to Reuters, who spoke with a legal representative for the Remote Gaming Association, the European trade association has urged the EU to take punitive action against the U.S. in the internet casino gambling issue. Lode Van Den Hende commented, “It looks very much as if this matter will… be sent to the WTO at the end of the commission’s investigation.”
Reuters has also reported an anonymous EU official had commented 4to inevitability of further action, claiming a report would be put together by November. Following the report, the EU would have to decide which course of action to take, the most probable being an arbitration with the World Trade Organization.
The latest attack that Congressman Barney Frank has launched on the Unlawful Internet Gambling Enforcement Act, HR6870 or the Payment Protection Act, was passed through the mark-up stage in the House Financial Services Committee and is due for a vote in the House. The Payments Protection Act was designed to halt the enforcement of the UIGEA “except to the extent as any such regulation pertains to wagering of the type that is prohibited (as of the fate of the enactment of this Act) under chapter 178 of title 28, Unite States Code (relating to professional and amateur sports protection.)”
After an intense debate by both parties, HR6870 was passed to the House with a positive vote of 30-19 this week. The most recent of Frank’s bills would additionally keep banks and other financial institutions from permitting wagers on professional sports leagues in the United States. Finally, the U.S. Treasury and Federal Reserve will be forced, in team with an independent Administrative Law Judge, to more clearly define what is and what is not considered illegal online gambling. This is an action that Frank and other lobbyists have been fighting for for some time.
Many national sports leagues are obviously not in favor of HR 6870, and Congressman William Lacy Clay responded, “I’m alarmed that the major league sports would come forward to announce their opposition to the bill. I’m puzzled by their stance especially when you have legal sports books in Las Vegas. I can’t figure out what the difference is between internet gambling and Las Vegas sports books is.”
Lacy continued, in reference to the UIGEA, “Sometimes we should be willing to admit when we made a mistake and passed a law that’s unenforceable.”
Frank made note, in the debate, of the ambiguous nature of the UIGEA. He showed the hypocrisy of the U.S. law concerning internet casino gambling by pointing out the exemptions for horse racing, state lotteries and fantasy sports betting. “How people spend their leisure time should not be made illegal or encouraged in a free society,” said Frank. “If you’re going to [impose restrictions using the UIGEA], you’re hijacking the banking system. If this bill is passed, I would still like to repeal the law. Under this bill, at least the banks will know what is and isn’t illegal.”
Jeffrey Sandman of the pressure group Safe and Secure Internet Gambling Initiative commented, “This important vote acknowledges that the previous attempt to prohibit Internet gambling was overly burdensome and unworkable. We hope this vote indicates a willingness of Congress to develop a more sensible approach towards Internet gambling. Rather than prohibit an activity millions of American enjoy in the privacy of their homes, just as they can do in a casino, Congress should create a framework to regulate Internet gambling as a way to protect consumers and collect billions in much-needed federal revenue.”
The amendment to the bill that was later introduced by Frank would require a detailed list from the government within sixty days showing banking institutions which activities are illegal and which are not.
The Poker Players Alliance, one million members strong, urged online gambling enthusiasts over the past few days to address their concerns toward current internet gaming legislation to the Republican Party Platform Committee. The Committee is designed to report the party’s proposals, and manages a website hosting a virtual suggestion box of sorts.
With so many expressing their distaste for the two sentence item on the platform which states the GOP’s stance against Internet Gambling, the draft for the most recent platform appeared without the offending sentences. “This is a small victory in our determined effort to educate both sides of the aisle that there is a true constituency in America that values its Internet freedoms,” said PPA Executive Director, John Pappas.
According to Senator Richard Burr, co-chairman of the 112 member Committee, the move was made to attract more voters to the Republican Party.
But it was too good to be true, as the clause returned soon thereafter. Conservatives of the party had fought for its reinstitution. The clause reads, “Millions of Americans suffer from problem or pathological gambling that can destroy families. We support legislation prohibiting gambling over the Internet or in student athletics by student athletics who are participating in competitive sports.” These are strong words from the party with the highest divorce rates, teen pregnancy and sex scandals.
With the upcoming Republican National Convention, the platform has seen a 50 percent alteration. The committee will meet again next week to produce the final draft for the platform, and will most likely include the internet gambling clause.
According to the Pittsburg Tribune, a bill was proposed that will limit the number of lawyers allotted to any casino who had previously worked under the state Gaming Control Board in Pennsylvania.
The newspaper reports, “Senate Majority Whip Jane Orie, a McCandless Republican, introduced the bill in response to a Tribune Review report last week that the board’s former director of gambling operations registered as a lobbyist for Philadelphia Park and Mohegan Sun at Pocono Downs three days after leaving the board.”
It would appear as though U.S. officials, in addition to their opposition to online casino gambling, are doing everything in their power to prevent even live gaming to continue without a fight. It is apparent now that any former board will be forced away from representing a casino to prevent casinos from having experienced representation.
The article continues, “’The need for this legislation has become clear given reports in the media concerning the fact that the former chairman (is) now working for law firms where they represent casinos,’ Orie said in a memo to senators. Orie would make it a condition of employment for lawyers joining the gambling board.”
The proposal, if passed, will not apply to lawyers outside of the board, and will allow the state Supreme Court to regulate any lawyer assigned to a casino. Orie’s introduced the bill Monday, the results of which remain to be seen by the casino industry, after news quickly spread of the former chairman having joined with the casinos.
Three years after Alaskan officials introduced the idea of establishing an intrastate Gaming Commission that would regulate online casino gambling, the decision has been put in the peoples’ hands. This week voters will decide whether or not they wish to incorporate the Commission into the Alaskan Department of Revenue.
If voters favor the idea of a regulatory body a seven-member commission, appointed by the governor and approved by the legislature, would be given the ability to expand online casino gambling by permitting the use of slot machines, poker rooms, lotteries and other forms of gaming. Five of the seven members would vote on online gambling issues and just three would be required to reach a quorum. In doing so, the U.S. legislators that have prohibited such activity, arguing the immoral and addictive nature of online gaming, would hold no clout in Alaskan casinos.
Those supporting Ballot Measure 1 have stated that regulated gambling establishments would promote more tourism within the state and create more job opportunities, while sharing a portion of the taxed revenue that is now going to Nevada and online casinos.
“There’s a lot of money involved, and it should stay here,” says Ken Jacobus, a lawyer who wrote some of the initiative for Alaskans for Gaming Reform. “I’m voting yes because I think it’s good for the Alaska economy.”
Pub owners, who predominately fund the Gaming Reform group, head the campaign for Ballot Measure 1. Darwin Biwer, owner of the bar Darwin’s Theory in Anchorage and chairman of the reform organization has put all of his efforts into the initiative. According to Biwer, many pub owners are holding huge charity raffle events to raise money for the campaign. “There is no one watching the henhorse,” he observed.
Unfortunately for Alaska, however, not everyone is on board with the idea of legalized gambling. State revenue officials claim that such a commission would not affect the levels of illegal gaming activities as it would only involve licensing issues. The overplayed argument that gambling can cause divorce, child neglect, bunktruptcies and debt-driven crimes has also been made, as officials claim that only lawmakers should have the authority to expand it.
That being said, the Department of Revenue shows that Alaskan state gambling like pull tabs, bingo, raffles and lotteries have contributed $32 million to charities, cities and educational groups annually.
Alaska’s Tax Division, currently regulating gambling activities, feels that this is too much responsibility for just seven members. Johanna Bales, deputy director of the division stated, “This commission is given very broad power under this initiative, so you would have three individuals potentially who could decide what types of gaming can take place in the state up to a full-blown casino. There’s nothing in here that sets any kind of parameters as far as I can tell.”
The initiative gives the stipulation, however, that no more than five gambling machines would be allowed in a single location until after December 31, 2012. Following that time, the limit will increase to 20 gambling machines.
