Off Shore Gaming Association

This week the U.S. Department of Justice seized bank accounts belonging to two processing companies – Allied Systems and Account Services. These two companies were processing payments to U.S. players for several poker sites. This is a clear violation of the UIGEA and thus the government felt it was right to sieze $33 million dollars in funds.

The mainstream media got a hold of this from a statement released by the Poker Players Alliance (PPA). This group has gone on the offensive lobbying in Washington with the claim that poker is game of skill and, thus, is not illegal. Perhaps all of this rhetoric has lulled the poker community into thinking that what they are doing is 100% legal. The playing may be in that proverbial ‘gray area’, but the moving of the money to play with is still in violation of the UIGEA.

ABC News found one player who had won a seat for the World Series of Poker. ‘David’ had a payout check bounce at his bank. ABC News quoted the player “David” as saying, “It’s not like the government went after money that the site made, instead they seized money that belonged to me.” The whole government action is being portrayed as taking the funds from players – these were “players funds” was repeated in almost every article on the subject, including the NY Times. The PPA recently posted on their site “The funds that were seized were not the property of any online site – it was YOUR MONEY that was seized.”

However, in reality the news outlets, the PPA and ‘David’ have it wrong. The money was at the processing company, it had not yet been delivered to the players. The poker rooms were not shut down, just a couple of their processors were attacked. Keep in mind, every gaming property online has multiple money processing companies.

This has happened on many occasions to sports bettors in the last few years. We have reported on several books, including large ones, who have had checks bounce on players due to government seizures or simply just shady companies going out-of-business. Since affected players never actually received any payout, we have seen every sportsbook make good on any bounced checks. Either another check is issued or another method of payment is used.

Back in June of 2008 a processor, Zip Payments, faced a similar showdown with the DOJ. This time $9 million was seized. Not a whisper in the news. You know why? The players were all compensated and though it took affected sporsbooks many months to recover, every player was paid out in full. Bodog has been a target of these seizures with several different processing companies losing over $24 million to the DOJ. Yet, all Bodog players eventually were paid out every dime.

We contacted both Full Tilt and Poker Stars who have been implicated as companies that use(d) these processors. Full Tilt did get back to us with the following comment, “We will be protecting players’ money and players do not have to worry about getting paid their funds.” There has been no reply yet from Poker Stars, but since they are a reputable company that wants to stay in business, we expect that players will also eventually get their money.

Still, poker players are up in arms. “How could they do this to us? Poker is not illegal.” And no, it may not be, game o’ skill and all that. But, certainly moving the money for the purposes of illegal gambling is. And that is what Allied Systems and Account Services were doing. Again their funds were seized, not the 27,000 players that the PPA claims.

Have poker players been lulled to sleep on what has been happening? Were they clueless to the processing problems that exist in today’s gaming environment? I can only surmise that they have followed blindly the “poker is game of skill” argument without seeing the ramifications of sending money offshore to engage in games for real money. Poker players have been led down a path now for several years where they believe that their money is safe at an online company. The truth is, the U.S. Government has been doing just about whatever it wants to online gaming companies since 2006. The DOJ and state governments have arrested CEOs, tried to ban domain names, made legitimate companies plead in retroactive cases and yes, seized funds.

Keep in mind, the U.S. Government is not the bunch of dummies that so many players think. They went after these processors during the World Series of Poker. What better time than to scare the American poker players into thinking that their money is going to be seized and big brother will come a knocking? What better time to get the most possible exposure for your act?

The most alarming thing about all of this is that the entire industry felt that this type of activity would cease during an Obama administration. Barney Frank did make a statement, but since he does not work for the DOJ, his words have little impact. As will this latest government action. The cards will continue to be dealt, poker rooms will still serve U.S. players and money will still change hands.

The government can scare players, but it cannot stop the flop or the parlay or a roll of the dice . . .

No Comments »

With the advent of a new sports betting law in the state of Delaware, the NFL has come out with guns a blazin’. They are digging their heels in for a fight that they most likely will not win.

The most powerful league in all of sports told the justices the new law might soon be challenged in a state or federal lawsuit. “I think that it may not have such a long wait,” Nachbar said.

One key point is that the NFL feels that sports betting tarnishes the league’s image. In fact, NFL Commissioner Roger Goodell had written Delaware Governor Markell stating this as fact while this law was still being debated.

Sports Betting tarnishes the image of the NFL? Michael Vick doesn’t? Pacman doesn’t? Most recently, Donte Stallworth doesn’t? I think the Commissioner should look inside his own organization for tarnished images, not to Delaware lawmakers.

But I digress. The NFL is against gambling . . . or is it ?

It was announced earlier this week that the NFL is getting into bed with state lotteries as the league owners voted to allow teams to partner with lotteries across the country. So far, the New England Patriots have signed up and talks are ongoing in Michigan with the Lions, Minnesota with the Vikings and New York with the Bills, Giants and Jets. The Titans said they would consider a deal in Tennessee and the Packers are interested in Wisconsin.

The joint venture is a dramatic departure for the NFL, which has been staunch in it’s efforts against and affiliations with any type of betting or gambling.

At a press conference this week, NFL commissioner Roger Goodell said there was a distinction between Delaware’s sports gambling and the state lottery tickets.

“This would purely be scratch-off and chance games. They are not in any way connected to the outcome of our games. That is a critical feature for us,” Goodell said at the press conference. “We do think it is responsive to the pressures that states are feeling right now to help meet some of those budget shortfalls. It has been effective in other sports, and it is something that is a reasonable policy.”

Let’s face it, the NFL sees the lottery tickets as a way to make up for revenue lost from declining sponsorships and merchandise sales and diminishing corporate sky box revenue. This is a thinly veiled attempt for the NFL to promote the teams and to get a cut for licensing the team logos.

Shame on the NFL; Locking up the front door while opening the back door. Please Mr. Goodell, have the league take a stance. Are you for or against gambling?

No Comments »

This week the tiny state of Delaware beat the odds and enacted a bill to allow sports betting. This one move forced the hand of the NFL who needed to come up with some kind of legal opposition to this new law. Since Delaware was grand-fathered in to allow sports betting, they could not use the Amateur Sports Gaming Protection Act . . . since Delaware has decided that initially the betting will be done via parlay cards, creating a sports betting ‘lottery’, the NFL could not argue that this violated the state constitution. So, the NFL, with its infinite wisdom and apparent willingness to look for a short-sighted victory, played the skill game card.

Hooray for the NFL!! Sports betting is now a game of skill (as if we all didn’t know that by now).

The NFL has argued before that betting on their games was pure chance. They have used this argument previously before the House of Representatives and during other court cases. According to the NFL no skills are required to win at sports gambling, until now. When no less an authority than the National Football League recognizes that sports betting is a game of skill, no further debate is really necessary, is it?

According to a brief filed in the Delaware Supreme Court, the NFL is prepared to argue that betting on their games requires skill, and that “Setting a point spread might make it more difficult for a bettor to decide which outcome to select, but does not render the game one of chance.” Yet the best quote “If a game is predominantly one of chance,” attorney Kenneth J. Nachbar wrote, “it will not matter who is doing the picking — a skilled expert, or a monkey choosing at random.”

I don’t know about you, but there are weeks every season where I think the monkey could do better than me at picking games!

Joe Brennan, the head man at the Interactive Media Entertainment & Gaming Association (iMEGA), told us via email that, “We thank the NFL for conceding the obvious, and hope that this point of view will be reflected across the board in their dealings with the gaming industry, both online and off.”

Why does this latest revelation from the NFL matter?

Gambling is loosely defined as wagering in which the outcome depends more on chance than skill. However, many states have statutes that specifically make betting on sports events illegal. Still, not every state specifically prohibits sports wagering or other ‘games of skill’.

Many state laws refer to “Lotteries” instead of “gambling.” Some state courts have held a lottery is defined the same way as gambling: “a wager where the person gets a reward in a manner predominantly determined by chance.” Other courts and laws specifically define “lottery” as you would think: a numbers style game of pure chance.

The NFL wants the Delaware Court to hold that sports betting is not a lottery but is gambling – it involves skill. By using a skill games argument in court, the NFL seems to have failed to see the risk that in many places not being a lottery is exactly the same thing as not being gambling.

Many people have mentioned to us that that a better argument would be that this violates the Federal Wire act of 1961. The Federal Wire Act criminalizes accepting a sports bet made across state lines (or more recently across country boundaries) via a communication device. In reality, it is the Amateur Sports Gaming Protection Act (ASGPA ) that makes the betting of games illegal. This 1992 law is what is basically keeping states from becoming bookies right now and is the law that gives four states, including Delaware, a carve out.

So, though the NFL may have opened the door in one way, the ASGPA might trump any movement from states that are not grand-fathered to allow sports betting. In the meantime, I have to work on my skills.

No Comments »

This week, the champion of freedoms for Americans Representative Barney Frank introduced yet another offering pointed at legalizing internet gambling. Last year the honorable Mr. Frank introduced similar legislation, which did not get much traction and did his best to block the implementation of the UIGEA. Unfortunately for Internet gamblers, he struck out with both efforts.

Frank’s most recent House Resolution, introduced on Wednesday, is so new that the bill does not yet have a number! Frank said Wednesday at a news conference introducing his bill that he hadn’t spoken to Congressional leadership nor to the Obama administration about the online gambling legislation. Never mind that the U.S. financial system is in the tank, news outlets this week were very interested in this new gambling bill. Frank was asked about his latest piece of legislation on his seemingly daily appearances on Bloomberg, CNN and Fox news. Fox ‘News’ seems to have already made up its mind on Internet gambling, “If running major financial institutions and the auto industry isn’t enough for the Obama administration, a new House bill would put the Treasury Department in charge of Internet gambling.”

View the News Conference video where Frank introduces the Bill here.

The initial offering from The House Financial Services Chairman calls for 5 year licenses for operators and seeks an applicant and any other person associated with the applicant to be a “person of good character, honesty, and integrity.” The bill plans to tax player payouts and makes it illegal for operators who are not licensed to take bets from U.S. citizens.

In all, the bill looks like it is aimed at poker and casino games and operators that are already land-based in the U.S. In fact, sports bettors are completely out-of-luck with this legislation, “No provision of this subchapter shall be construed as authorizing any licensee to operate an Internet gambling facility that knowingly accepts bets or wagers on sporting events from persons located in the United States, except for fantasy or simulation sports games.” It looks like the NFL, fantasy and poker lobbyists are certainly doing their job.

We applaud Barney for his continued efforts but wish he had not thrown sports betting under the bus. In all fairness, his previous efforts had met such staunch opposition form the four major sports leagues, he probably included the above language to create an easier path toward passage. Any laws that establish the Internet to the freedoms that Americans are entitled too are a positive step in the right direction. If nothing else, legalization of Internet gambling would free up the payment gateways.

Still, bettors should not get their hopes up too much as this legislation is far from coming to fruition. Frank indicated that this legislation is still in the early stages and he planned on pushing them through Congress some time before the break in the session scheduled for August.

Once this legislation is actually given a bill number, we will have a way to get involved and contact your representative to let him know to give Barney Frank his/her support. Keep your eye on this space or subscribe to our BLOG feed.

What’s Your Opinion? Add Your Comment Below!

9 Comments »

There is an interesting wager that I have played over the last several years encompassing two races at Churchill over two days – the Oaks on Friday and the Derby on Saturday.

The ‘Oaks/Derby Double’ has been a way that some value can be found where there typically is an overwhelming, and rightfully so, favorite. Though many of my cohorts haven’t even heard of the wager, the public has, with the pool growing to over $2 million in the last few years. The double has been great fun for me, as there is an extra ‘live’ ticket going into the Derby and it has cashed twice for me in recent years.

In ’04  The play was Ahsado (Oaks) with Smarty Jones (Derby) paying over $60. In ’06 the wager was ultra wide with 5 horses in the Oaks over Barabaro. Unfortunately, Lemons Forever was not one of them. The longest shot on the board cashed at 47-1 and the play paid $890.00 – making me a fan of this wager forever. I got back on the winning side last year with ticket that cashed for $37.80 with Proud Spell and three others over Big Brown.

This year however the play is upside down – the prohibitive favorite is #6 Rachel Alexandra in the Oaks (Friday, May 1 - Churchill Race 11). The Derby field is wide open but this filly at under whelming odds of 3/5 makes for a bullet in this double. This is one wager where you can find value in a horse where there just is none.

Take any of the horses you like in the Derby as the backend end of the Oaks/Derby Double  and you should find pretty good value. Whether you like any of the Derby favorites such as I want Revenge, Dunkirk, Pioneer of the Nile or Friesan Fire or a handful of longer priced horses, couple them with Rachel Alexandra in the Oaks/Derby double and add that into your pile of potential winners come Derby Day.

1 Comment »

After 2 weeks of public hearings, the Delaware State House Gaming and Pari-mutuels Committee today, approved House Substitute 1, a stripped down version of HB100, and paved the way for legal sports betting in Delaware.

Recent public hearings, packed with employees of the states 3 racinos, spurred the bill sponsor, House Majority Leader Rep. Peter C. Schwartzkopf (D-14), to make significant changes to his initial bill. Major changes included no new casinos or gambling parlors and the creation of the Video and Sports Lottery Study Commission. Schwartzkopf ‘s new bill was released only last night, drawing ire from many present at the hearing. Still, the major components of sports betting and an annual license fee for existing racinos were left unchanged.

A representative from Governor Jack Markell’s (D) office urged lawmakers to act swiftly in the passage of this legislation. These politicians fully understand that the NFL season is the ‘mecca’ of sports betting. The Committee provided a time line to begin as soon as two weeks, so that the state would have ample time to build, implement and train, prior to the start of the 2009 NFL season.

Unilaterally, legislators feel the pressure of the NFL season looming, yet many are seeking additional time to review and work on the current legislation. A two-week time period was discussed, but it was pointed out that any delays in legislation may cause the start of Delaware sports betting to miss the first several weeks of the NFL season. When pressed for actual numbers by Rep. Bradford Bennett, (D-32) the Governors’ committee (after seeking out a calculator) revealed that any delays would cost the state over 2 million dollars per week (per NFL Betting weekend) in lost revenues.

In all, Delaware projects up to 35 million dollars (adjusted figures due to the economy were said to be between 22 and 30 million) in additional funds to the state coffers. However, opponents of the bill state insinuated that this is all “fuzzy math”. Acting both befuddled by the figures and argumentative as to their accuracy, members from both the Committee and the floor acted as if the figures were pie-in-the-sky. Apparently, the State is counting on ‘crossover’ players from sports to slot machines. They also added that their latest figures were arrived at using a formula that included the same 19% drop in revenue that Atlantic City, NJ is currently experiencing.

Opposition to this bill was wide-spread. Horsemen, racino executives and, of course, the NFL, all voiced opposition throughout the two weeks of hearings. However, only the NFL, opposed the sports betting portion of the bill consistently. The representatives from the casino and racing industries, vehemently opposed the greater tax burden being placed upon them, even going so far as to say these additional fees would bankrupt their industry.

The three current racinos, were asked “point blank”, if they plan to participate in sports betting in Delaware. All three racinos were in agreement that due to startup costs and a 50% revenue share, they could not commit to a definitive “yes” on the subject.

Who are they kidding? To have a monopoly on the only legal sports betting east of the Mississippi, no matter what the take-out, appears to be a no-brainer! Simply put, the only reason these racinos are hedging their bets is because of the additional taxes contained in the bill.

Over the next several weeks, vendors will be submitting proposals to provide sports betting services to the racinos. Oddly enough, offshore giant Pinnacle Sports, has thrown their hat into the ring. a Wilmington based lobbyist spoke with the OSGA and told our representative at the meeting that Pinnacle is anxious to begin the RFI (Request for Information) process. Pinnacle Sports has long been an industry leader with their “reduced juice” model. The lobbyist also told the OSGA that Pinnacle, with ten-plus years of experience, certainly can work within Delaware’s constitutional model, to provide an excellent betting product for the public and a profitable one for the state.

It is now up to current gambling industry representatives and state lawmakers to hash out final percentages and revenue shares. With the initial hurdle now cleared, this bill is headed into the Delaware House and Senate, ultimately landing on the Governor’s desk. Hopefully, an agreement will be reached shortly, as it is clear Governor Markell wants to exploit the Professional and Amateur Sports Protection Act of 1992, which gave Delaware the legal means to offer sports betting. In fact, it was the Governor’s representatives that were providing facts and figures supporting every aspect of Substitute Bill 1 at today’s Committee hearing!

If Delaware can come up with a sports betting product that players want, that gives the casinos a chance to reap some additional revenue AND can plug a hole in the state budget . . . Markell will sign it as fast as you can say Super Bowl. That’s a solid bet!

4 Comments »