Florida Man Steals $1.6 Million to Feed Legal Gambling Addiction

by Hillary LaClair, Senior Editor
January 27, 2009

               While the U.S. government recently saw the reimplementation of the UIGEA, it continues to protect the domestic market in allowing online horse racing wagers. Although many representatives feel that online casino gambling is dangerous in that it will lead to problem gambling, it was inevitably the horse racing industry that has resulted in a serious gambling addiction this week.

When the Unlawful Internet Gambling Enforcement Act was passed in 2006, legislators felt the need to protect forms of gambling that made the state governments money – regardless of the enticing and yet equally irresponsible nature as online casinos – including online state lotteries and internet horse racing wagers. A case in Florida shows that any form of gambling can be risky, or any vice for that matter, despite the fact that it might generate money into the state.

David Sarnowski, 50, serves as this example, having been arrested in Pinellas County, Florida on Saturday, after stealing $1.6 million from a law firm where he worked. Over four years Mr. Sarnowski embezzled this money from a company for which he provided payroll services: Yarborough, Sarnowski and Evans. The reason? Sarnowski is addicted to horse racing online.

“He would bet large sums, and he would bet often,” said a spokesperson for the Pinellas Sheriff’s Office, Cecilia Barreda.  Investigators says that Sarnowski electronically transferred the money into his personal account from the account of the law firm Tanney, Eno, Ingram and Griffith P.A. Sarnowski embezzled the money from June 2004 to February 2008, when he left work for good, not without first taking his work desktop computer with him.

The law firm to which Sarnowski belonged began to investigate irregularities than turned up and discovered that Sarnowski was involved in a number of them. Allegedly, he began diverting money from the firm to his own payroll account, and at the same time was not paying the IRS for payroll taxes.

“We have a government who is trying to outlaw online casino gambling, yet keep forms of gambling like horse racing and lottery’s {sic} legal. His actions show that even forms of internet gambling approved by the government can be harmful if not regulated correctly,” said Harvey Trusbel.

The case raises the question of whether it does more damage to outlaw online casino gambling, leaving internet gamblers with an unregulated industry, or to allow gamblers a properly monitored venue for gambling online.

A study in 1995 showed that out of 184 Gamblers Anonymous members surveyed, 56 percent admitted to some illegal act to obtain money to gamble. 58 percent said that they had written bad checks while 44 percent said that they stole or embezzled money from their employer. Generally, these crimes are not committed in casino-towns.

“I call it the exploitation factor,” said Professor Henry Lesiuer, who specializes in problem gambling. “Pathological gamblers commit crimes.”

Antiguan Attorney Calls For an End to U.S. Economic Warfare

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.

IGT Stock Down Significantly in the Last Quarter

by Hillary LaClair, Senior Editor
January 23, 2009

                International Gaming Technology, or IGT, a Reno-based slots machine giant and online and mobile gaming provider, is struggling to make its goals this year – showing a 42 percent reduction in the Q4 revenue from this time last year. According to reports released on Thursday, IGT was pulling in profits of $65.7 million dollars – selling at 22 cents per share – down from $113.7 million and 36 cents per share reported in the same quarter in 2007.

                Financial analysts had anticipated that stock in the online casino and slots games provider would be sold for 26 cents per share this quarter. “Results were modestly below our expectations, with revenue slightly ahead offset by lower-than-expected profitability,” said David Katz, a gaming analyst at Oppenheimer. “Overall, the quarter’s results did not suggest that we need to make any significant change to our thesis.”

                Gaming analysts said that IGT had been a victim of the declining economy since before the end of last year, however. Many casinos, feeling the effects of a sloping economy, did not invest in new gaming platforms. The value of company’s stock had decreased over 80 percent in the New York Stock Exchange in 2008. Total revenue dropped 6.8 percent from last year – from $646 million to $602 million.

                “While we expect continued softness in the domestic slot market, we believe management is taking proactive approach in order to maintain margins,” opined Steven Wieczynski, a gaming analyst at Stifel Nicolaus. “Cost-cutting and restructuring efforts should allow IGT to turn revenues into profits at a swifter pace once the gaming environment improves. We believe investors are putting too much emphasis on the near term and not focusing on the potential long-term growth story, which revolves around the next replacement cycle and gaming expansion.”

                IGT expanded its market into the internet casino industry in 2005 when it acquired WagerWorks. WagerWorks, with IGT, supplies gaming casino software that it claims are “uniquely tailored to meet the needs of the operator.”

                Last year, IGT reached into the mobile gaming market in 2008, with its purchase of Million-2-1, a cell phone gaming software provider which offers prize competitions, voting facilities, polling facilities, lotteries, call radio, call TV activities and other interactive applications.

                Still, IGT Chairman and CEO, TJ Matthews, feels that the company succeeded as well as it could, given the current economic status. “This is the worst economy in decades,” he said in a conference call with gaming analysts. “We’ve completed our initial cost reduction efforts and will continue to look for more ways to save. We’ve overcome difficult conditions and significant marketplace changes in the past. I’m confident we’re going to do so again.”

                The majority of gaming analysts agree with Matthews, saying that the expectations for IGT this past quarter, given the circumstances, were low. “We think there is a lot of noise in the quarter, but it is clear that business fundamentals remain weak,” said Susquehanna gaming analyst Robert LaFleur in a statement to investors.

                IGT shares closed at $11.58 in the New York Stock Exchange on Thursday, showing an increase of 1 cent.

Kentucky Attornies Appeal the Domain Seizure Ruling

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.

Obama’s Midnight Freeze Comes One Day Too Late – But Calls for Citizens to Remake the Country

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.”

Make Your Own Slots Game at Makeslots.com

by Hillary LaClair, Senior Editor
January 20, 2009

               While thousands of online casinos in existence and many with hundreds of games, sometimes gamers still can’t find the perfect casino. That is why the Online-Casinos.com group, headed by Jan Balslev, has released a do-it-yourself program that uses a no-download flash based program to create customizable slots games. The easy-to-use service is at no cost to internet casino gamblers, and includes a how-to turtorial.

                Online-Casinos has implemented graphics from various online casinos to create makeslots.com, where users may receive embedded codes to post on their home websites. “Makeslots.com allows normal websurfers including website owners to make their own custom slot machines,” Balslev commented. “They can then either play their unique creation on the MakeSlots site, or they can choose an option which provides the finished product in code form which they can export to their own website for use… all completely free of charge.”

                Players name their slots games, choose color schemes and reel symbols and can incorporate custom images. Additionally, the online casino gambler will decide the “starting cash,” which ranges from $199 to $1,000 or 3,980 coins to 19,980. The player chooses the paylines, the coins to bet, the coin size and the number of spins. Audio files are included in the casino.

                For webmasters, makeslots.com can be used to create a themed slot, whether it is gambling-related, political or a promotion of a product. “The permutations and subjects that players, affiliates or webmasters can use are limited only by their own imaginations. This was a project on which we had a ton of fun whilst developing the concept, and so can everyone who tries out the finished product,” said Balslev, “Whether you use celebrities, sports, gaming elements or personal graphics, you can produce a unique and highly customized instant-play slot that’s entertaining and practical in application.”

                The do-it-yourself program may be of particular interest to online casino affiliate programs as a means of making a website look more professional, without the hassle of creating a program themselves. The concept was thought of when a number of U.S. online casino gamblers complained of the lack of websites that cater to the country, and the idea of being prosecuted for using them.

                “…The closer is that users need absolutely no technical skills – we’ve done it all for you and everything you need, even a few suggesting to get you going, is right there in simple animated guide form on the MakeSlots website.”

                Players may access makeslots.com to review a number of examples of customized slots that range from baby pictures, kittens, fish, spiders and fruit themes to scantily dressed women(nudity is forbidden, however). Players are restricted from uploading explicit, racist or copyrighted themes, and are asked not to remove a “little blurb of text” in the generated code that links to MakeSlots and its sister site, Online-Casinos.com

Hop-on Showcases it’s Mobile Casino at Las Vegas CES

by Hillary LaClair, Senior Editor
January 17, 2009

               The online casino community showed a great deal of skepticism when Hop-On Inc announced its live interactive mobile gambling software late last year. Many have discredited this company after it released what it called a “disposable cell phone,” that later turned out to be Nokia phones with a different plastic casing around them.  After a change in brand name and management however, Hop-On assures its customers that it is legitimate.

                The company seems to have made good on its word, having provided critics with a live demonstration of its mobile casino at the 2009 International CES in Las Vegas. Attendees at the convention were able to see the platform in action, finding the booth under a banner which read “WebCasinos.com.”

                “We will be showcasing our Interactive Gaming software,” said Peter Michaels, CEO. “The focus will be on the software, as we could not get Flash to work at its best on the Android platform yet, and Java does not provide the quality that I am looking for.”

                The Andriod platform that the software uses is powered by Google – lending a credible name to Hop-On. Using Android applications, users may access mobile device functionality through standard API’s, and easily embed HTML and Javascript on the web. Applications can run in parallel with notifications for each and every program running.

                “Once we complete the Android OS, we will be going after the Apple OS and Windows OS for cell phone. The Live Interaction, the Real-Time gaming and the ability to chat with other bettors online while getting your cards from a live dealer will be what our software is all about,” Michaels concluded.

                The mobile casino will be offered in Europe online, in compliance with some geographic restrictions, and will be licensed and regulated.

The Proposed Midnight Rule Act May Overturn Anti-gaming Legislation

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.

iMEGA to Take Its Case Before the 3rd Circuit Court of Appeals

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.

Progressive Gaming Bails on Foreclosure Hearing

by Hillary LaClair, Senior Editor
January 16, 2009

                Casino gambling software provider, Progressive Gaming International Corp., has found itself in a pickle after missing a foreclosure sale deadline that was scheduled on Thursday. Despite the fact that Progressive’s software can be found in offline, mobile and online casinos internationally, the company has failed to pay a $17 million debt to one of its lenders

                According to a number of undisclosed sources, a “major slot machine manufacturer” attempted to purchase Progressive’s software patents and radio frequency identification systems. When asked Ed Rogich, a company spokesperson for International Game Technology (the company to which Progressive Gaming owes the debt), said he was unable to comment about the casino provider’s failure to pay.

                A good portion of the management team at Progressive Gaming left the company as it went under. Attempts to get a comment from the management have been met with an automated recording which stated that the headquarters were closed. Executive Vice President, Bob Parente, declined to comment on Thursday.

                IGT is not the first to bring litigation against Progressive Gaming, however, as Hasbro Inc. filed an affidavit on Wednesday. Progressive allegedly owes the toy company $1.7 million, after one of its slot machines featured a Hasbro product. The court ruled in favor of a $2.7 million settlement, and Progressive has not paid more than $1 since.

                Additionally, Progressive was forced to pay $20 million to a gaming provider in 2007, in a federal antitrust lawsuit. The company has since been forced to place its assets up for the highest bidder, after reporting in September that it would not make its quota.