If You Can’t Beat ’em Join ’em
by Hillary LaClair, Senior Editor
April 21, 2009
According to several racetrack owners, online casinos make for “unbeatable competition” as horse racing wagers slow down with the economic climate. Many racetrack owners have setup slots games and video lottery terminals within their building claim in an attempt to hold up against the virtual competition. U.S. racetrack owners are one of the few that have been exempted from U.S. laws banning the financial transactions of online gambling, but according to a Canadian horse racing venue, Woodbine Racetrack, $200 million is lost each year to online casino gambling.
Statistics show that of $865 million spent on horse racing wagers at Woodbine, one if five dollars is spent in online casinos that would have otherwise gone to the racetrack. Racetrack owners have been forced to consider establishing online racetracks as a means to compete with the online casino craze.
“If we don’t offer customers exactly what they want, they have so many opportunities to get around us and bet offshore,” said Woodbine Entertainment Group Vice President, Jane Holmes. “It is a huge impact. It’s not just horse racing wagering. Some people have moved to online poker.”
Holmes has called for lawmakers to create stronger bans against internet casino gambling, perhaps ignoring free trade agreements that have resulted in federal litigation for similar legislation. The E.U. recently found the U.S. guilty of offshore trade violations with its Unlawful Internet Gambling Enforcement Act that has consistently targeted foreign markets, and may pursue legal action if an agreement is not reached.
OCA gaming analyst, Sherman Bradley, believes that the recent trends in land-based horse racing wagers is the result of changing times, however. “If you sell spaghetti out of a can, and then people desert you and flock to a restaurant that sells awesome homemade spaghetti, it wouldn’t make sense to ask legislators to ban homemade sauce,” opined Bradley. “Instead, you’d have to find ways to upgrade your product.”
According to Bradley, Holmes has admitted that online casinos and other gambling sites offer advantages over their land-based counterparts, such as better payouts percentages (due to the lack of maintaining a physical location), that have led to the popularity and success of the online casino industry. Racetrack owners should therefore consider opening the doors to online customers, as they are one of two forms of gambling that are legally able to operate on the internet in the U.S. and Canada.
“Convenience, freedom to smoke, no parking, traveling or entry fees, and great odds are all factors in people choosing online casinos over land-based gaming,” said Bradley. “Trying to prevent it is like forcing people to travel by locomotive while planes are whizzing overhead.”
Several racetracks in the U.S. have made efforts to allow casino gambling in the tracks in order to compete with the industry. Recent state legislator talks in Florida about expanding gambling in the state have been opposed by the staunch Republican belief that such gaming is immoral. As a result, land-based casinos throughout the U.S. have been forced into bankruptcy as the online market continues to flourish.
US DoJ Files Motion Opposing iMEGA’s Attempt to Obtain Information on Lottery Ban
by Hillary LaClair, Senior Editor
April 16, 2009
The U.S. Department of Justice has defended its position to withhold information regarding credit card companies having blocked online lottery ticket purchases – despite the fact that these transactions are exempted from the UIGEA’s ban on internet casino gambling. iMEGA filed a motion with the U.S. 3rd Circuit Court of Appeals to have the information provided, which the DoJ has countered with a motion opposed the addition of such court records.
iMEGA’s defense attorneys that call for the appeal of the UIGEA (Unlawful Internet Gambling Enforcement Act), has consistently argued that the ban on online casino gambling is too vague for the financial institutions left to enforce it to determine what does and does not constitute “unlawful internet gambling.” The court records showing the recent blocks of online lottery tickets provides iMEGA with substantial evidence that these arguments are legitimate – which is why the pressure group believes that the DoJ has chosen to withhold the information.
Lead attorney with the DoJ, Nicholas Bagley, wrote in a motion opposing the addition of the information, “This material was not before the district court…and is not germane to iMEGA’s facial constitutional challenge to the Unlawful Internet Gambling Enforcement Act of 2006. Because this is not an ‘exceptional cas{e}’ that would warrant supplementing the district court record…the government opposes the motion to supplement.”
“The regulations didn’t exist two years ago when this was brought to the district court,” added Joe Brennan Jr., chairman of iMEGA. “The regulations did not go into effect until Jan. 19, 2009, more than two years after they were due, and two years after we filed in district court. Should the government get credit for dragging its feet on this?
“Now you see the negative effect this law was destined to have. It has led to over-blocking, even of transactions like state lotteries and horse racing, that have been given specific exemptions by this law. I know that the DoJ doesn’t like to lose, but to suggest that this is not ‘germane’ to the case – how the law actually works in the real world – is simply ridiculous.”
The supplemental material, which includes four on-line articles, a record of a conference call between the Treasury Department and the North American Association of State and Provincial Lotteries, a final rulemaking from the Treasury Department and internal operational guidelines from Visa International is relevant to iMEGA’s case that states that the vagueness of the ban on online casino gambling would lead to confusion from the banks and other financial institutions that have been forced to ensure the law’s enforcement.
iMEGA is not the only organization that has had issue with the U.S. Department of Justice. Earlier this year, Party Gaming co-founder Anurag Dikshit, was forced into a settlement by the DoJ – which pursued legal action against the company despite its having pulled out of the U.S. market in 2006 when the UIGEA was put into motion. Meanwhile, online casinos and other internet gambling establishments have continued to operate unlawfully in the U.S. with no consequence.
iMEGA was founded in 2007 as a professional association dedicated to the continued growth and innovation of the internet – including online casino gambling and other forms of virtual entertainment. The non-for-profit pressure group is headquartered in Washington DC and seeks the constructive engagement with government at federal and state levels to ensure the challenges of online medium are addressed with “full participation of the people and companies that have built the Internet into the powerful influence of society it has become.”
Harrah’s Entertainment Reduces Debt by 2.3 Billion Dollars
by Hillary LaClair, Senior Editor
April 10, 2009
Harrah’s Entertainment was able to gain a temporary stay of execution this week, reducing its debt load by $2.3 billion in a program that ended Tuesday. Experts are unsure, however, if that amount will be enough to keep the company out of bankruptcy court.
Gaming analyst Barbara Cappaert reported last month that Harrah’s would file for bankruptcy by the end of the year. “We think this latest restructuring is an attempt to rearrange the deck of chairs on the Titanic,” she said.
Harrah’s announced last month that it would swap an undisclosed amount of debt for $2.8 billion in lower value interest notes that would grow in nine years. Apollo Management and TPG Capital, Harrah’s parent companies, have offered to exchange the notes for $250 million, or 37 cents on the dollar for notes tendered by December.
Bond analysts said on Thursday that they are examining the exchange details and will release reports later to discuss the effect that the swap will have on the company’s liquidity. The exchange accounts for $3.4 billion in new 10 percent notes that will mature in 2018 when issued. A subsidiary issued an additional $297 million in notes for the $442 million in bridge loans that the company repurchased. Most of the share holders that exchanged notes held notes that matured in 2015 and beyond. The new debt has a longer maturity date.
Harrah’s Entertainment said in mid-March that it may not be able to generate enough cash flow or secure additional loans to service its debt. The company said that revenues last year dropped 10.3 percent to $10.13 billion. This resulted in cash flow decreasing by 16 percent, from $2.81 billion in 2007 to $2.36 billion last year.
Visitation in Las Vegas Drops 8 Percent
by Hillary LaClair, Senior Editor
April 3, 2009
The land casino market continues to diminish, unlike that of its online casino counterparts. According to the Las Vegas Gaming Wire, the discounts that Las Vegas resorts have begun to offer customers has helped attract tourist but not to maintain visitation this year as the figures dropped 8 percent in February to 2.8 million people.
The numbers, taken from the Las Vegas Convention and Visitors Authority, show a declining industry – illustrated in the increasing number of closing casinos and gambling resorts filing for bankruptcy.
“You can’t just sit there and wait for tourism to go back up,” said Michael Crandall, director of business affairs for the Siegel Group. Despite the economic downturn and losses in consumer base, Crandall’s casinos are undergoing several million dollars worth of renovations. “Is it scary out there? Yeah, but it’s not going to slow us down.”
The occupancy rate in Las Vegas for February was 83.9 percent, down 5.5 percent from the same period in 2008 and the lowest rate since 1991 when there were 75,000 rooms available as compared to 140,729 vacancies in 2008. The rates for rooms decreased 22.9 percent to $99.25 from $128.80 last year.
Even convention attendance has decreased from previous years, dropping 34.8 percent to 583,168. “Part of it we think is the perception issue we had,” said Kevin Bagger, director of Internet marketing and research for the Las Vegas Convention and Visitors Authority. “It is hard to separate that from other things.”
RewardsAffiliates Offers 60 Percent Commission Throughout April
by Hillary LaClair, Senior Editor
April 2, 2009
Online casino affiliates may wish to sign with RewardsAffiliates.com, which has offered to pay an impressive 60 percent commission on all new referrals to the CasinoRewards.com group throughout the month of April. Casino Rewards offers a wide array of online casino websites, including Blackjack Ballroom, Casino Classic, Captain Cooks Casino, Golden Tiger Casino, UK Club Casino, Zodiac Casino, Golden Reef Casino, Lucky Emperor Casino, Challenge Casino, Virtual City Casino, Music Hall Casino, Nostalgia Casino, Yukon Gold Casino, Strike It Lucky Casino, Casino Kingdom, Aztec Riches Casino and Phoenician Casino.
A 60 percent commission is nearly double the regular commission offered by the Rewards Affiliates Group and one of the highest rewards structures in the casino affiliate program market. Affiliates can sign up for a range of positions with the group, from blogging to gambling affiliate websites, linking banners by their own sites to refer customers to the Rewards group. When the player signs up, deposits, wins or loses with the respective casino, the affiliate will be rewarded with a commission payment.
RewardsAffiliates.com was named the Best Casino Affiliate Program in 2008 during the CAP awards and the Best Casino Affiliate Manager in January this year. The company offers its affiliates a high commission structure, marketing tools, monthly payouts and a 24/7 support team. The services are offered English, Spanish and French.
Casino Rewards was established in 2000 and is associated with some of the most reputable leading online casinos in the industry. 18 multilingual online casinos have signed with Casino Rewards and feature free play and sign up bonuses, over 300 video slots, table and card games and around the clock support in several languages.
Last month, the team was joined by RewardsRiches.com, giving the network more presence in the industry, and allowing the company to offer its 60 percent commission promo all throughout the month of April.
Rewards Affiliates offers 35 percent commission at any other time during the year, lifetime partnership commissions, constantly updated marketing materials, a dedicated support team, no negative balance carryover, unlimited earning potential and 24/7 player support. With every sign up, affiliates earn $50 and commission is offered every trying that a player deposits 100 currency units in casinos or players 500 raked hands in poker rooms. The company also offers a Poker Rewards program that includes reputable online poker rooms Poker Rewards, Golden Tiger Poker, Captain Cooks Casino, Virtual City Poker, Aztec Riches Poker, GTCasino/Poker UK, GTCasino/Poker DK and GTCasino/Poker ES.
Banners, Flash Banners, Emails, Text Links, Exit Pops, Direct Downloads and Casino Domain Parking are offered as part of Rewards Affiliates marketing tools. Customer support and affiliate coordinator and management representatives can be contacted via e-mail, MSN Messenger, Yahoo Messenger and ICQ Messenger at any time of the day.
Interest participants may visit www.rewardsaffiliates.com for more information.
Japanese High School Student Purchases Adult Bank Account to Play Online Casino Games
by Hillary LaClair, Senior Editor
March 31, 2009
A 16 year-old Japanese college student was charged with having illegally obtained a bank account last week using an adult’s name so that he could play online casino games, according to Japanese police.
“I wanted to have an account under an adult’s name to bet on Internet casino games and bicycle and boat races,” the teen told police officials.
The boy, whose name is not given because of his age, allegedly purchase an internet bank account ID and password belonging to 41 year-old housewife in Aichi Prefecture in August for 17,000 yen. He searched online for a website that sold bank accounts offering to pay approximately 10,000 yen.
Because many online casinos have age restrictions put in place and require a form of valid identification (which sometimes can be provided in the form of a credit card), the teen could not gamble online until he had assumed the identity of an adult. In the UK for example, the average male is asked to prove his identity eleven times per year. According to research, by 2010 Britons will be asked to produce ID, usually in the form of a passport, an average of 17 times per year, many times in registering with an online casino.
The case was brought before the Tokyo Family Court under suspicions of a violation of a law that prevents the criminal transfer of finances. In July of 2007 the boy, who was then in 9th grade, registered to play online casino games using his mother’s credit card. After playing online casinos for some time, he managed to rack up nearly 1.3 million yen in gambling debts. After running out of money, he swindled three people out of a combined 700,000 yen promising to sell them online bank accounts.
A recent survey by Trend Micro says that British teens may, for lack of “netiquette” be tempted to resort to illegal methods online to earn money. Out of 505 teens that were polled, ten percent thought it was either cool or funny to pretend to be another person while on the internet. One in seven teens, according to the study, said that they have assumed another identity on the internet. Four out of ten teens said that they have accessed another person’s online account to read e-mails, look at bank account details or view a social networking profile.
Male subjects were reportedly more likely to hack into another person’s social networking profile, while females were more likely to log into an online bank account to shop.
This behavior may be coming from the parents, however, as Trend data also showed that one in three parents have hacked into another person’s online profile, including online banking information. The data, while based on just over 1,000 people, may not give a full representation of how the internet us being used by teens, but the percentage is nonetheless alarming.
Researchers recommend that anyone in the same househould amongst teens should discuss cyber crime and set better examples in the way that they utilize the internet.
Toddler Left in Car While Father Gambled
by Hillary LaClair, Senior Editor
March 28, 2009
Police are investigating an incident in Calgary where a man was arrested for having left his 21 month-old son unattended in a car for over six hours while he gambled in a casino. The child was found after he was heard crying and rescued from the locked car by local firemen while the temperature outside was approximately -8C.
Firefighters retrieved the boy from his car seat in the back of the car in the Silver Dollar Casino’s parking lot just after midnight, responding to a call the child had been crying. A firefighter managed to pry open the from passenger door.
“As soon as they got in, the baby started reaching out to the firefighter,” said fire department public information officer, Jeff Budai.
The firefighter unbuckled the little boy from his car seat and carried him to the warm fire engine, where the toddler was given a little stuffed animal.
"In no time, they had him giggling. They entertained him for 10 or 15 minutes and then (the police) and EMS showed up," Budai said.
The 50 year-old father, who cannot be named because it would identify the toddler, allegedly covered the windows of the car so that the child would not be seen and occasionally left the casino to check on him. The child was found with no shoes and no socks on, and had vomited on himself. The man was arrested as he left the casino. The infant was apparently kept out of the father’s sight to avoid a conflict.
The Calgary man has been charged with child abandonment which carries a maximum penalty of five years in prison. A Calgary and Area Child and Family Services spokesperson, Dawn Delaney, told the press that in cases where a child’s well-being is at risk, officials will attempt to first find a suitable member of the extended family to care of him or her. The outcome will be determined by the ongoing investigation as to what the father was doing in the casino for the six hours that he had neglected his child.
Calgary police spokesman Kevin Brookwell said officers are working with Calgary and Area Child and Family Services and still investigating to determine what the man had been doing for the six hours he was inside the casino.
“The little boy is safe and doing well,” said Delaney when asked about the child’s welfare. She told officials that in a case where immediate family cannot care for the child, he or she may be placed into foster care. “We will continue to work collaboratively to determine where the best placement is for this little guy.”
"The nature of addiction is that you make bad decisions and the object of desire supersedes everything else," said Robert Williams, who co-ordinates the Lethbridge Alberta Gaming Research Institute.
Five other incidents have been reported since 2006 where a child was abandoned, three of which were incidents where the children were left behind in vehicles.
MGM Mirage Acquires Temporary Stay of Execution
by Hillary LaClair, Senior Editor
March 27, 2009
MGM Mirage avoided filing for bankruptcy in its CityCenter project this week by making a $200 million funding payment and allowing construction of the project to continue while adding to the near $9 billion cost of the site.
The payment made to the company’s lenders was approved and covered $100 million of which was owed by joint-venture partner Dubai World. Dubai World had entered into a lawsuit with MGM Mirage earlier this month claiming that a mismanagement of the project had lead to an overrun in costs. The million dollar payment has put at least one month’s stay on the company having to file for a Chapter 11 bankruptcy reorganization of the U.S.’s most expensive commercial development.
“We are doing our utmost to see that this project continues, keeping thousands of Navadans employed,” said MGM Mirage Chairman and CEO Jim Murren. “We will continue to make every effort to see that CityCenter is completed and becomes an even greater economic driver for the region.”
The introduction of CityCenter Casino and Resort may provide a vital asset to Nevada, which continues to struggle in the economic downturn with 26 percent of the state’s workforce in the casino industry. CityCenter workers are very excited to learn that they will remain employed. "Everybody was wondering what was going to go on, were we going to have jobs," Todd Greeley, a union laborer, said about the general feeling among workers when they arrived for work at 4 a.m. Friday. "Especially the way times are now."
According to research in Las Vegas, the unemployment rate in Nevada stands at 10.1 percent and could increase to 11.1 percent if CityCenter were to close, laying off 8,500 construction workers on top of the 10,000 hired full-time for the casino resort. "What if MGM restructures and halts CityCenter, literally stops it? The short-run impact of those jobs could be really unpleasant," said Alan Schlottmann, economics professor at the University of Nevada. "If all of a sudden those guys aren’t spending money, what’s the economic multiplier?"
Analysts are puzzled at Dubai World’s unwillingness to pay its portion of the debt. JP Morgan gaming analyst Joe Greff said that the company may have made this decision for one of three reasons. It either wishes to walk away from the project, sell its stake or it may not have the money to invest.
"Based on today’s events, we have a tough time believing that Dubai World is trying to negotiate a bigger stake in the property," Greff said. "Dubai World still has to obtain at least one more form of Nevada gaming regulatory approval and we have to wonder how they would secure this if they are refusing to fund contractual equity stakes."
CityCenter has in preparation of Dubai World’s not holding up its end of the bargain, hired bankruptcy specialists, Dewey & Leboeuf. The company is owned in a 50-50 partnership between MGM Mirage and Dubai World. Dubai World has not commented on the reason for its skipping its payment, but did say in statement, "Dubai World appreciates the support of MGM Mirage’s bank group and the CityCenter joint venture’s bank group in providing a waiver to its client that allows this payment."
CityCenter May Go Bankrupt by the Weekend
by Hillary LaClair, Senior Editor
March 25, 2009
The Las Vegas CityCenter casino and resort project, labeled by parent company MGM Mirage as the most expensive commercial development in U.S. history, may end in bankruptcy as early as the weekend, nine months before the center is scheduled to open its doors. The “city within a city,” developed by eight award-winning architects and allowing visitors to live, work and play on its grounds, is yet another example of the declining land casino market during the economic recession as compared to its online casino counterparts. It follows Harrah’s entertainment, an immensely popular casino brand, on the road to financial ruin.
The bankruptcy may be the result of a lawsuit involving MGM Mirage that took place earlier this week, wherein its joint-venture partner, Dubai World, alleged that the casino company had improperly managed the 76-acre development plan for the project, and substantially increasing the cost. The initial estimated cost of the CityCenter was pegged at $7.5 billion, but reports from the Las Vegas Sun say that the cost has risen to $8.7. Another report from the Review Journal states that the cost has risen to $9.1 billion. The partners are reportedly forced to make a $220 million payment on CityCenter.
Alan Feldman, and MGM spokesperson told VegasHappensHere.com, “The safest apples-to-apples would be our previously stated $9.2b less the just announced $600 million in savings.” He later told the news source, “The Sun is correct. $8.7 total, $1.2 of which we are hoping to finance.”
“When completed in 2009, CityCenter will be one of the great urban places of the world, a reflection of the best of the life that we’re living today and tomorrow,” reads a description of the buildings on the website. “It will be a place of continual evolution, richness and diversity – a place people from around the world will desire to visit and experience.
“Across the country and throughout the world, people are rediscovering the excitement of the city. The city is where the people are, where the action is, and where all that’s thrilling and new comes together – whoever you are. Las Vegas will soon have its own urban core – a 76-acre city-within-a-city that’s destined to redefine the skyline.”
While MGM Mirage said in a statement that despite the lawsuit with Dubai World, the company was ready and willing to complete the center and the multi-million dollar payment, the Wall Street Journal said that lenders will not allow the casino operator to make its payment for the building unless Dubai World makes an additional contribution. If the company which has stated that it has concerns about the project’s viability does not make its contribution, CityCenter will be forced to file a Chapter 11 bankruptcy reorganization as soon as the weekend. MGM said in a press release that the lawsuit was “completely without merit.”
CityCenter has already been in the process of hiring some 10,000 full time employees and has accepted over 90,000 applications. “We’re concerned about the jobs, but we don’t have any insight or details over what may or may not be going on over there,” said city council spokesperson, Steve Redlinger. “Rather than concentrate on what we don’t know, we’re going to concentrate on what we do know and that is (this) morning our workers are going to be back on the job building that project. If there is {sic} other plans in the future, we’ll deal with those once they become known.”