Gaming Law "In the News" ...
A Catania Consulting Group Client Newsletter February 21, 2009
Integrity, Leadership, Experience ...
Frank Catania, Esq. President, former Assistant Attorney General, Director NJ Division of Gaming Enforcement, VP Compliance Players International. frank@cataniaconsulting.com
Gary Ehrlich, Esq. VP, former Assistant Attorney General, Deputy Director NJ Division of Gaming Enforcement. gary@cataniaconsulting.com
Keith Furlong, VP, former Public Information Officer & Legislative Liaison NJ Division of Gaming Enforcement. keith@cataniaconsulting.com
Joseph Kelly, Esq., Associate, Professor of Business Law, SUNY College Buffalo. jkelly@cataniaconsulting.com
Will Congressman Frank Introduce Another Internet Bill?
Rep. Barney Frank (D-MA) chairman of the House Financial Services Committee expects to reintroduce a bill similar to the one introduced in the last session of Congress. The Bill, it is rumored, would establish a licensing and regulatory structure for the strict regulation on Internet gaming would differ a little from the previous bill in the manner in which the new regulations would be implemented and enforced by the federal and state authorities.
It is also expected that the current Democratic controlled Congress will take action in rescinding the UIGEA regulations adopted by the Bush administration in its last days, which would go into effect in December of 2009. Rep. Frank was quoted as saying, "I expect an Obama DoJ to be less zealous about locking people up. These outrageous arrests in transit - they should be stopping that stuff."
Internet Domain Case Continues in Kentucky Supreme Court
As detailed in our January newsletter, the Kentucky Court of Appeals last month reversed a lower court ruling that had allowed the seizure of 141 Internet gaming domain names. Kentucky Governor Stephen Beshear had sought to seize the names, alleging that it was to protect Kentucky’s gaming industry. The government has now appealed the Court of Appeals’ decision to the Kentucky Supreme Court, also requesting to file an over length brief to reargue the issue whether iMEGA and other parties, like the Interactive Gaming Council, have legal standing to represent their members.
“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., iMEGA’s chairman. “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.”
Is Poker a Game of Skill? Conflicting Rulings in Pennsylvania and Elsewhere
In our January newsletter, we reported that a Pennsylvania trial court held that Texas Hold ‘Em poker constitutes a game in which skill predominates over chance, and thus did not constitute gambling in that State (Commonwealth v. Dent (Ct. Common Pleas, Jan. 14, 2009)). However, this month another Pennsylvania trial judge came to the opposite conclusion, holding that poker tournaments constitute illegal gambling under Pennsylvania law. In the meantime, the government has filed an appeal in the Dent case, thus promising an appellate decision in Pennsylvania in the near future. It is note worthy that the court relied upon various law review articles including “Is Poker a Game of Skill or Chance” Gaming Law Review by Joseph M. Kelly
Coincidentally, a judge in Colorado also ruled this month that poker is a game of skill for purposes of that state’s gambling laws. While continuing to be raised in the context of state laws, this issue has even broader potential ramifications with regard to federal law and Internet gaming.
Online Wagering Site Does Not Violate Washington State Law
The State of Washington is known as one of the least friendly to Internet gambling, even making it a felony to be a mere player. So it seems ironic that an online wagering site, betcha.com, just won a decision from the Washington Court of appeals holding that it does not violate the Washington gambling laws.
The site provides a forum for person-to-person wagering, taking a small fee for each wager placed and accepted. However, all users participated with the explicit understanding that losers were not required to pay the winners, and did so only voluntarily on the honor system. Based on this feature, the court held that betcha’s operation did not constitute either “gambling” or “bookmaking” under Washington’s statutes.
Although this case to some extent constitutes a victory for Internet gaming, it may still be appealed to the Washington Supreme Court. Additionally, the atypical nature of betcha’s business model will limit the applicability of the ruling even if it stands
Trump Atlantic City Casinos File for Bankruptcy
For the third time in its history, Trump Entertainment Resorts, Inc., parent company of the three Trump Atlantic City casinos, has sought Chapter 11 protection in U.S. Bankruptcy Court. The action comes only days after Donald Trump resigned as Chairman in a feud with bondholders, after they rejected his offer to buy the company and take it private.
Mark Juliano, Trump Entertainment Chief Executive Officer, indicated that the company had sufficient cash to continue, but that it voluntarily filed for bankruptcy as a pre-emptive strike against bondholders trying to force the company into bankruptcy on their terms. The company hopes to restructure its debt by working with bondholders under the Bankruptcy Court's supervision.
The Trump casinos are expected to continue normal operations, and the bankruptcy filing should have no effect on the pending sale of Trump Marina. Trump Entertainment's financial plight has been magnified by the recession as well as the recent introduction of slot parlors in Pennsylvania.
Super Bowl Wagering Down in Las Vegas
Legal Super Bowl betting continues to decline in Nevada and in 2009, the drop was 11 % from 2008. What impact, if any, has the UIGEA had on off-shore Super Bowl betting? UIGEA has had a negative impact on players who want to utilize a reputable financial transaction provider. Catania Gaming Consultants associate Joseph Kelly was quoted in the Pittsburgh Post-Gazette: “One impact from the U.S. government’s crackdown on the activity is that it has removed Americans’ access to some of the larger reputable companies that formerly served them…. Gambling-related companies listed on the London stock exchange backed off after 2006, while less reliable operators filled the void.” Kelly, who with Frank Catania, helped draft Antigua’s internet gambling laws, suggested consumers would be better off dealing with companies licensed in a legitimate offshore jurisdiction.
U.S. Government Fails in Internet Gambling Cash Seizure
Bill Scot, along with about 20 other individuals including Jay Cohen, were indicted in 1998 (and again in 2003) on Wire Act violations. The U.S. Government also seized almost $7 million of betting proceeds. In a civil action, the U.S. Court of Appeals (U.S.A. v $6,976,934.65, plus interest, U.S. App .LEXIS 1312, 2009) reversed summary proceedings allowing the seizure because there was no credible evidence that Scott had chosen not to return to the U.S. solely to avoid prosecution. Joe Kelly said, ”how easy it is for the U.S. government to seize money from a foreign bank if that bank has a branch in the United States .This allows for a very easy seizure and is something an offshore entity such as an internet gambling company should be aware of.”
Catania Gaming Consultants Member Appearances
In February, Catania Gaming Consultants vice president Gary Ehrlich appeared at the American Bar Association seminar entitled “Gaming Law Minefield.” He appeared as a panelist both on “Interactive Gaming” and on “Hot Topics in [Land-Based] Gaming.”
On February 27, Catania Gaming Consultants associate Joseph Kelly will speak at the Canadian Institute Conference on Gaming in Canada. Professor Kelly will speak on the current status of online gaming in the United States.
