Gaming Law "In the News" ...
A Catania Consulting Group Client Newsletter June 16, 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
New Jersey Governor To Join Federal Lawsuit To Overturn Ban on Sports Betting in US
In our April newsletter, we noted the filing of a complaint in federal court in New Jersey seeking the invalidation of the Professional and Amateur Sports Protection Act (PASPA) on multiple constitutional grounds. iMEGA et al. v. Attorney General et al. (D.N.J. 2009). New Jersey Governor Jon Corzine has now announced that he will seek to join that lawsuit.
The federal government's prohibition on sports betting for some but not all states is fundamentally unfair," Corzine said in a statement. "There should be uniformity in the application of federal law. If one state is allowed to legalize betting on sports events, all states should be allowed the same opportunity."
Corzine’s support comes a month after Delaware Governor Jack Markell legalized sports betting in an attempt to fill a budget shortfall of at least $600 million in the coming fiscal year. "Delaware's entry into sports wagering and table games is a serious threat to both the casino and horse racing industries in New Jersey," Corzine said. "We simply cannot afford to sit back and let neighboring states press an unfair advantage against us anytime, and certainly not in the midst of this global economic crisis."
European Commission Finds US Violates Trade Agreement
In a report initiated by a Trade Barrier Regulation complaint filed by the Remote Gambling Association (RGA), the European Commission has concluded that the treatment of foreign Internet gambling operators under existing US law constitutes a barrier to market access for European companies. The report further finds that the US is in violation of international trade law by threatening and pursuing criminal prosecutions, forfeitures, and other enforcement actions against foreign Internet gambling operators, while allowing US online gambling operations, primarily horse racing, to continue unmolested. These findings echo those rendered earlier by the World Trade Organization (WTO) in litigation between the US and Antigua
The European Commission report suggests resolving the trade dispute through a negotiated solution with the Obama Administration. If the parties cannot settle the matter themselves, the Commission could bring a case against the US before the WTO. It is also possible that enactment of legislation introduced by Rep. Barney Frank (D-MA), the Internet Gambling Regulation, Consumer Protection and Enforcement Act (H.R. 2267), would resolve this trade dispute by regulating Internet gambling and creating a level playing field among domestic and foreign Internet gambling operators.
Minnesota Drops “Black List” Blocking Order in Settlement with iMEGA
An order to Internet service providers (ISPs) to enforce a “black list” of Internet gambling web sites has been rescinded by the Minnesota Department of Public Safety (DPS). In a letter from the head of the department’s alcohol and gambling enforcement division (AGED), the ISPs were told that they were no longer required to block state residents’ access to a list of 200 Internet gambling sites, and that DPS did not anticipate issuing any future orders, indicating the issue of online gambling was better addressed though legislative efforts.
“We’re very happy with the outcome,” said Joe Brennan Jr., iMEGA chairman. “It was clear the public opposed this, and the swift negotiated settlement by DPS and AGED demonstrates both the merit of our suit and the shaky legal ground that the original ‘black list’ were based.” As part of the settlement terms, iMEGA was given copies of letters sent to each ISP along with confirmation of delivery. In return, iMEGA agreed to withdraw its suit in US District Court before the deadline for Minnesota to respond.
iMEGA is also considering whether it will intervene in a seizure action initiated by the US Attorney’s office in Manhattan, freezing more that $35 million in payments to US online poker players. The action is reportedly based in part on the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, a law iMEGA has challenged in Federal court, and which is due to be heard by the US 3rd Circuit Court of Appeals next month in Philadelphia on July 9th.
Icahn Group Appears To Be Winner of Atlantic City Tropicana; Trump Calls Off Sale of Marina
A group including billionaire investor Carl Icahn appears to have won the right to buy the Tropicana Casino and Resort at the bargain price of $200 million after no additional bids were submitted by the deadline. The casino had originally been expected to sell for nearly $1 billion before the recession sent the price plummeting.
The debt holder group was widely seen as the favorite to win the Tropicana because it had offered $200 million of the debt it bought — at a steep discount — in exchange for the casino. Other purchasers would have had to offer more than $200 million in cash or securities. Under the procedure set out under the federal bankruptcy code, if no additional bids were received by the deadline, the debt holders' group was to get the Tropicana, subject to approval by the Bankruptcy Court and the New Jersey Casino Control Commission.
The Tropicana sale became necessary when, in December 2007, New Jersey regulators denied relicensure to its former owner, Columbia Sussex Corporation. After buying the Tropicana in January 2007, the company cut nearly 1,000 jobs, leading to problems with cleanliness, service and compliance with state casino regulations.
In other Atlantic City news, Trump Entertainment Resorts called off its pending deal to sell Trump Marina to a development group that wanted to transform the property into a Margaritaville-themed casino. Trump still wants to sell the casino, however.
MGM Mirage Called Out in New Jersey on Macau casino Partner
A long-awaited report by the New Jersey Division of Gaming Enforcement has alleged that Pansy Ho is an "unsuitable" partner in MGM Mirage's Macau casino. Ho is the daughter of Stanley Ho, who is reputed to have organized crime associations. Although the partnership had previously been approved by the Nevada authorities, it is likely that the New Jersey Casino Control Commission will hold its own hearing to explore the issues.
US Government Freezes Accounts Paying Winnings To Poker Players
Opening a new front in the US government’s battle against Internet gambling, federal prosecutors have asked four American banks to freeze accounts containing payments owed to online poker players. The frozen payments of at least $33 million are owed to 27,000 players at four offshore poker sites, including PokerStars.com and FullTiltPoker.com, according to the Poker Players Alliance, an advocacy group for online poker players. The accounts belong to two companies, Allied Systems and Account Services, that process payouts on behalf of the poker sites.
Past government enforcement efforts have focused on sports betting on the Internet, not poker or other casino-style games. The latest action is both aggressive and risky, inasmuch as there is legal precedent for the view that online poker is not a violation of federal law. It is also unclear whether players’ money, as opposed to that of online gambling operators, would be subject to seizure under any circumstances, since it is not illegal under federal law to be a player.
Catania Gaming Consultants Member Appearances
On June 10, Catania Gaming Consultants President Frank Catania appeared on the CNBC “Breaking News” program with Dennis Kneale, to discuss the Freezing of funds by the US government noted above. http://www.cnbc.com/id/15840232?video=1148592712&play=1. Catania Gaming Consultants Associate Joe Kelly was quoted by the Baltimore Sun regarding the Barney Frank bill and by the Casino Journal on New York gaming developments, and was interviewed on NPR concerning the federal seizure of online poker monies.
