Off Shore Gaming Association

On Monday sports gamblers on the East Coast experienced the agony of defeat. Upon hearing the verdict, I fear that now I may die and still never be able to legally place a wager on a sporting event, unless I go to Nevada. Sad to think this, but as I get older reality starts to set in. I’ve got about 30 years left, if you look at life as an optimist, and Monday’s ruling by the 3rd Circuit Court proclaimed a death sentence for legal sports gambling in the U.S.

People that I tell this too say that I am a pessimist, that there will be other issues brought before the courts on gambling. The problem is that the court took a most narrow approach in applying their decision to the Professional and Amateur Sports Protection Act. - PASPA. They could have ruled that single game betting in Delaware was permissible under PASPA. But instead, by deciding that only games that were previously offered can remain legal, they were saying that ANY expansion of sports betting violated PASPA.

New Jersey should forget their efforts. They plan to say that PASPA unfairly give four states and unfair advantage in offering sports betting and that is in violation of the U.S. Constitution. New Jersey Senator Lesniak was quoted saying, ” . . . this latest development does not deter us from challenging PAPSA as unconstitutional.” Perhaps I am over simplifying it, but the court’s ruling is obviously stating that ANY new sports gambling violates PASPA. Obviously, sports betting in New Jersey or any other state would be an expansion for sports betting, clearly flying in the face of current legal sentiment. In the sports betting world, PASPA is apparently now the Holy Grail.

We are hoping that the efforts of iMega and New Jersey are successful. But the odds of a federal ban on sports wagering being overturned dropped dramatically and are now considered by most to be a long shot, at best.

The proposed sports lottery was estimated to bring in at least $53 million annually for the state of Delaware. The state’s three casinos spent about $12 million upgrading their facilities in preparation of the launch. So instead of a legislated, regulated, taxed betting scheme, unlicensed bookmakers will still take in illegally bet dollars by the millions on any given Sunday. I would imagine that bookies in Philadelphia and Maryland were doing a jig on Monday afternoon. I was surprised that ‘South Philly Sammy’ was not at the hearing.

The NFL acknowledged to us back at the hearings in Dover that they know that illegal gaming occurs on their sport. But they do not want to see the proliferation gaming on their brands. Really what they did not want was for Delaware to win. What if the state’s revenue projections were low and the tiny state earned $100 million? Then every state would be lining up with Lesniak and iMega to get on board the gravy train. And that would certainly be the proliferation of sports gambling.

The NFL tired to hammer the ppoint that the expansion of gambling will hurt the integrity of the game. Certainly, they could not be talking about the small amount of wagers that Delaware might take in. However, they are worried about 50 states worth of bets. Still, it’s been explained many times, that legal betting acts as a watchdog for the leagues and sports in general.

Europe takes a different approach. Gambling is done on every major and minor soccer game played. BWIN, a gaming giant in Europe, is putting together a package worth $161.8 million to acquire Newcastle United F.C, one of the most fervently supported football clubs in the UK. They already have sponsorships with top soccer clubs including AC Milan and Real Madrid.

Basically, the NFL needs to get a cut of the pie. Had Delaware offered the NFL $20 million a year for the ‘right’ to bet on their games, do you think the NFL would have fired up the lawsuit wagon? Of if Delaware paid a sponsorship to have the state crest on the uniforms of the teams, do you think that the proliferation of gambling would be such a bad thing?

But barring such a deal (which again will not happen in my lifetime), with the latest case-law now in the books, any future sports gambling in the U.S. is going to have an impossible hill to climb.

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It’s September 1 at Delaware Park, just 45 miles from Philadelphia. Everything is ready to go. The granite table tops are polished and ready to go. The huge wall of television (there is an 82 individual 50-inch television wall) is blaring the NFL Pre-game show and the odds board is lit up.

But where are the sports bettors?

Probably at home on their phone or computer, because today the 3rd Circuit Court of Appeals ruled that Delaware’s plan to allow single game, Vegas style sports betting is in violation of the Professional and Amateur Sports Protection Act (PASPA). Thus, no single-game sports wagering will occur this football season in Delaware. And, wagering on sports other than the NFL are also in question.

Sad for Delawareans, certainly. But, the fact remains that this is a sad for sports betting in the U.S.. By this ruling, the court has basically come out and said that there will be no new sports betting anywhere, any time soon.

The NFL and the rest of the major sports leagues and NCAA had managed to get the 3rd Circuit Court of Appeals to expedite their request for an injunction against sports betting in Delaware. They brought their suit against Governor Markell, stating that ‘irreparable harm’ would occur to the leagues and their brands if this type of sports betting was allowed. Had Delaware been able to confine the arguments to just the harm that their proliferated betting was going to cause, they may have had a shot at packing their shiny, new sports betting parlors on September 1.

Attorney Kenneth Nachbar, who presented a solid case for the leagues and was very resilient to the sometimes hostile line of questions from the three-judge panel, stated early on that PASPA clearly prohibits single game wagering in Delaware. He quoted from the law, “to the extent that the (betting) scheme does not change form what existed before”. What the leagues’ contention was basically saying is that they know that Delaware had parlay betting before and that is (begrudgingly) ok, and is covered by PASPA. But, Delaware cannot add in single game wagering, because they did not offer single game wagers before PAPSA was enacted (1992).

The lawyers for Delaware, David Margules and Joel Friedlander, were dragged into a discussion on the legality ‘merits’ of the case. They tried in vain to keep on focus that single game betting was not going to cause irreparable harm to the leagues. Having to fight a potantial PASPA violation was unltimmately the downfall for the defense.

Judge McKee came out firing at Delaware’s first lawyer, Margules, saying that this situation was a “complete mess”. He went on to claim that Delaware could be selling illegal tickets, causing the state to become an illegal bookie. He appeared quite worried that the December case involving the merits of Delaware’s sports betting law and subsequent implementation would be found to be illegal. Judge Hardiman chimed in that it was up to Delaware to prove that their betting plan was not illegal. He said, “you have no problem with this court ruling the case on merits?” Later, he added to Friedlander, who was there to argue the case based on merits, that he was “fighting an uphill battle . . . at least with me.”

Friendlander did manage to make some headway with the judges. He stated the if you want to take what is said in the law literally, “we can only operate the three parlay games that we had before” and (Delaware) “could only operate them for four months, because that is what we did before.” Judge Hardiman did seem to like this line of reasoning and added in that you couldn’t “bet on the Texans, because they were not in existence before.” He added that schedules back then were only 14 games when Jude McKee, apparently an avid Cleveland Browns fan, noted that there were only 12 games in his team’s heyday. Hardiman said “it depends how thinly you want to slice the onion.”

The judges asked for a 35 minute recess after hearing again from the NFL’s Nachbar. The courtroom buzz was brisk and centered on the illegal betting that could be going on in Delaware. It appeared as if the NFL had done an outstanding job in presenting their case and had the upper hand early but Delaware’s Friedlander hit a three at the buzzer. It was anybody’s guess what the judges were discussing.

The three judges came back into the room more than 45 minutes later and Judge McKee read the courts’ decision. He said that Delaware’s single-game betting was in “violation of PASPA,” adding that “Delaware sports betting is not covered under the exemptions in the law.” Apparently, they did decide to rule this case on the merits, not mentioning the original reason that we were all there, the irreparable harm to the leagues. After all, with this decision, that is now a moot point.

Nachbar told a group of reporters after the trial that the NFL was “delighted” at the outcome.

They should be. The NFL, NCAA and other major sports leagues went to court looking for an injunction to temporarily halt Delaware’s sports betting. Instead, they got the decision that they were to seek in December. As of right now, they may have gotten the ultimate victory. Because, even through the Delaware racinos have already built their sports betting facilities, it is not without cause that they may opt out of this entirely. State studies have given an estimate that 90% of their wagers would be on single games. Parlay-only wagering could end up being a losing gambling proposition for the house (state). And that just wouldn’t be gambling.

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There was big news this week regarding the outcome of the plea from former BETonSPORTS kingpin, Gary Kaplan. Kaplan pleaded guilty last week. As part of the plea, he was forced to forfeit $43.6 million of his illegal gambling proceeds. This week the U.S. Department of Justice put a notice out on its website stating that it was giving ” notice of its intent to dispose of the forfeited property”.

Was this the miracle that former BOS players were looking for?

We heard from players by the dozens since this story broke on Wednesday on a small BLOG in the Midwest, “Feds Let Online Gamblers Lay Claim to BETonSPORTS’ Founder Gary Kaplan’s $43 Million, Beginning Today” blazed the headline from a BLOG on the Riverfront Times website. This was such a huge turn of events, possibly bringing to an end the three-year ordeal, that we heard from advertisers, former BOS employees still working in Costa Rica, and of course, players. These players, as could be expected, were rejoicing, at this sudden blast of great news. However, may gamblers see the glass as half full and we had several players also ask us if they would be prosecuted for laying claim to their funds.

However, players, nor advertisers, nor anyone really, will have a shot at the $43 million.

We immediately contacted Vantis, the corporate liquidators, responsible for paying players and most recently vendors who were owed money at the time of the BOS shut-down. They informed us that yes, they were in talks with the DOJ. But they would not comment further.

This news made the glimmer of hope burn slightly brighter.

But, a subsequent conversation OSGA had with Assistant United States Attorney Charles S. Birmingham extinguished any hopes for players.

Birmingham said point blank in an exclusive interview, “This is not the money that players sent in, this is not BETonSPORTS money.” Yes, according to the DOJ, this was money that Kaplan had earned operating BOS, not the money players had deposited or won. Birmingham went on to state that the $43 million was recovered by the government as forfeited, criminal proceeds.

Apparently, whenever the government gets ‘illegal criminal proceeds’, whether it be a house, Mercedes or cash, a notice is put out for people with legitimate claim to it. There are hundreds of these notices on the government’s website. For example, if a car was bought by Kaplan the day before he was arrested and the dealer let him drive it off the lot the night before he went on the lamb, the car dealer could apply for restitution. We doubt that many will stand up here.

We also found out, that though there are no laws specifically against a person placing a bet online, anyone who did fill out the form for their claim on the money may have to look over their shoulder for a bit. “We would have to look at any requests very closely”, we were told when posing the players’ question to the Assistant U.S. attorney.

So what is the money going to be used for? “Law enforcement purposes”, we were told by Birmingham. He cited the last time such a large amount of forfeited funds came in, a children’s program was funded.

Little solace for the thousands of BOS players.

Birmingham added that players should continue to pursue their money “through the liquidators”. He means Vantis, who is still working on it….

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In our office complex apparently somebody complained yesterday morning. Why? We were doing the happy dance and yelling like teenagers who just scored their first six-pack from a take-out package store. Why? Legal single-game betting is now a reality in Delaware.

To confirm that sportsbetting will exist East of the Mississippi, on I-95, just outside of Lincoln Financial Field, where the Eagles play their home NFL games, there is a giant billboard proclaiming, “SportsBetting in Delaware”! That’s all it says. And all it needs to say.

According to several media sources, the entire sports betting operation hinged on single-game betting. As the OSGA has reported before, the foray into sports gambling in Delaware in the 70s went down in flames with parlay cards. This week’s court decision to allow this type of betting was a welcome relief. I was very worried about 8-5 two-teamers or getting 4-1 on a three game parlay.

Though the sports leagues were defeated, I do not feel too bad for the ‘integrity of the game will be tarnished” NFL and other sports leagues. They will still get their day in court – December 7, almost playoff time. By then, no doubt, the NFL’s image will look like the bottom of an old copper frying pan. But, maybe the image is more affected by the actions of some players and the league itself. Michael Vick appears to be ready to play and maybe some team will give PacMan another shot when their secondary gets depleted by injuries. Most likely these players and others who forget that it should be a privilege to get paid millions and be adored by fans are allowed to compete because they simply sell tickets and merchandise.

Merchandise, like lottery tickets. As of right now there are more than a dozen pro football teams that will have lottery tickets with extra special prizes like tickets to a game or team merchandise. And the NFL isn’t the only one who thinks that gambling is OK, as long as it is not actually on their games. In 2007, the Texas Rangers and Houston Astros had Texas scratch-off tickets as part of a Major League Baseball deal with state lotteries. Last year, the National Basketball Association’s Dallas Mavericks, San Antonio Spurs and Houston Rockets had scratch-off games. Several news outlets have quoted the judge in the NFL suit, Chief District Judge Gregory M. Sleet , “the professional sports leagues’ position was ‘ironic’ given that a number of sports teams now have sponsorship deals with casinos and several owners or part owners of sports teams also own gambling establishments.”

What it comes down to it the NFL or any of the major sports leagues do not want anyone but the NFL, MLB or the NBA to make a nickel off of their ‘product’. Or maybe it’s the owners don’t want anybody but themselves to make money off of their teams. After all, it’s all about the money. Do you think the NFL would be putting up such a fight if they were getting 25% of the net win? Or if they could find a way to have the state pay a licensing fee to use their team names and brands on their tote boards?

Even the NCAA has gotten into the act. They came out with an edict, “No predetermined or non-predetermined session of an NCAA championship may be conducted in a state with legal wagering that is based upon single-game betting (high school, college or professional) in a sport in which the NCAA conducts a championship.” In this case it looks like they are cutting off their nose to spite their face. The new Delaware law prohibits any type of sports betting on any Delaware college game. So, this new policy only punishes the students at Delaware universities. In addition, Delaware, has often been a preferred football playoff host because the Uinveristy of Delaware’s stadium holds 22,000 and because their program is always among the national leaders in Division I-AA average attendance.

So unless there is a force mejure at work here, Las-Vegas style betting parlors will open in three racinos in Delaware on September 1. One of them is less then 30 minutes from Philadelphia. We are planning a road trip and expect to be there by 10AM.

But, this does not mean that East Coast players’ accounts will sit idle. I doubt that there will be road trips to Delaware on Monday to check lines and that there will ever be a traffic jam at the racino after a key injury is announced. And certainly there will be no teaser or prop wagering.

So how do the offshore operators feel? One told us that, “We support any decision that sheds light on the fact that the vast majority of Americans consider the concept of gambling on sports to be a right they should be able to exercise legally . . . regardless of their jurisdiction.”

I couldn’t agree more.

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