Off Shore Gaming Association

The online gambling community was widely optimistic last fall as voters in the U.S. bucked the previous 8 years of Republican rule and voted a democrat into the White House. Everyone, yours truly included, figured that Democratic majorities on both Capitol Hill and the executive branch of government would spell a return to the days of easy payments and loosened regulations. Instead, this regime has continued the same Bush prohibitionist stance on online gambling. The ongoing confiscation of more payment processors’ bank accounts and the recent apprehension of a prominent bookmaker, and the government’ attempt to tie Internet gambling into his arrest, prove that the U.S., despite the efforts of Barney Frank and others, will remain one of just three developed nations on the planet that prohibit gambling on the Internet . . . at least for the near future.

Since the Obama administration took office there have been more arrests, continued confiscation of bank accounts, ongoing investigations into Internet gambling companies and the impending implementation of the banks as the police of internet gambling.

Party Gaming founder Andrew Dikshit settled with the previous administration for $300 million and our eyes popped when reading the story. However, in July, Party Gaming itself settled with the US authorities for an additional $105 million, payable in installments through 2012! This settlement was in return for the US Attorney’s Office for the Southern District of New York ensuring the company and any of its subsidiaries will not be prosecuted for providing internet gambling services prior to UIGEA. In May, the U.S. government seized $24 million from bank accounts linked to Bodog. And, in August, Missouri officials got ex-BETonSPORTS kingpin Gary Kaplan to forfeit $43 million. Now, NY seeks $125 million form the latest arrest.

For several years now, the Feds in Maryland have been pursuing alleged money laundering in the internet gambling realm. So far in 2009, Maryland has seized $800,000 from Electracash and $365,366 from Atrium Financial Group. In addition, Account Services’ Douglas Rennick was indicted on charges of money laundering, bank fraud, and illegal gambling. If found guilty, Rennick faces a $1 million fine on the bank fraud charge, a $500,000 fine on the money laundering charge, and a $250,000 fine on the gambling charge. The indictment also seeks the forfeiture of at least approximately $565,908,288 (yes, that’s half a billion), which represents the amount of proceeds obtained as a result of the illegal gambling and bank fraud conspiracies. The list goes on and on. With a couple of million here and a few hundred thousand there, the government will have to hire extra accountants to count all of the money.

In 2006, Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA), which prohibited banks and credit card companies from transferring money for Internet gambling, in effect banning online gambling. However, the law left open the door for states to allow Internet gambling within the state’s boundaries, according to a Legislative Analyst opinion related to a bill last year. Still, the prohibitionist stance has taken hold in several states throughout the union. In April, the Minnesota Department of Public Safety released a list of 200 internet gambling sites that it was looking to ban in the state. Kentucky continues to fight over some gambling domains that they feel they can shut down. That case is now in the state Supreme Court.

Internet poker has been looked at by Indian tribes and states alike with California, via the loophole in the UIGEA, looking to come to the forefront. But, the effort many industry insiders thought was going to become law in California became muddled as everyone wanted a piece of the pie. The California bill has been declared dead at this point.

Really, the stance continued by this administration is simple. It’s all about the money; Making it and keeping it without any new political ramifications.

The voices for regulating and taxing Internet gambling all have one thing in common - taxation and regulation will yield big revenue for a government that is currently running deep in the red. But when you add up the ‘criminal proceeds’ gathered from the cases just this year – the prize is nearly $200 million. Add in another $300 million from the Party Gaming founder and the 2-year haul is nearly half a billion. That’s some serious cash and it leads to a surprising hypothesis. If the prohibitionist stance can rake in millions, why bother to head down the path of the rest of the Free World? Why not just keep investigating, busting and confiscating to fill the coffers? In fact, I wonder if right now there is talk amongst state and federal legislators to add a line item their budgets for proceeds from Internet gambling raids. Then, simply put enough manpower behind gathering the ‘criminal proceeds’ to meet the budget . . .

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We posted a report on Thursday from the Queens County District Attorney’s Office in New York stating that law enforcement officials throughout the country organized to bust a huge gambling ring and had some 27 of thirty defendants in custody. The operation called “Operation Betting It All” apparently had been ongoing for 38 months – more than three years! This story hit the newswires and almost every news outlet on TV and print, as well as Internet pundits, latched onto it.

Why? Because the government is continuing its scare tactics, so that gamblers will not play offshore or with online bookies. And, what better way to spread the word of the evils of Internet gambling than to have a headline that includes the words multi-million dollar, Internet gambling and the coup de grace, organized crime.

Every report we found, from this one at NY1 to the Associated Press, loves to say a ‘half a billion dollar’ operation and feels the need to indentify Joe Fafone as a Gambino associate. The government claims to have already seized 3 million in assets and are looking for $125 million more from the defendants. Pretty good haul for New York’s coffers if it really pans out! The government has already gotten huge amounts of money from some of their strong arm tactics and recent arrests just this year – $34 million from ex-BETonSPORTS headman Gary Kaplan and $105 million from PartyGaming, the online poker and casino operator, who agreed in April to pay a penalty as part of a “non-prosecution agreement”. In addition, the government is not done shaking down foreign corporations as Sportingbet PLC believes that it will also reach a settlement with the U.S. DOJ this year.

After reviewing the document from the Queens D.A., which reads more like a feature article than a press release, it appears that the target of the investigation was Joe Fafone and an alleged sports betting credit operation that ran across several states here in the U.S. However, the D.A. appears to have blurred the lines between a long-standing credit operation and the post-up shop in Panama. In addition to identifying several credit shop websites, the press release also mentions industry giant BetOnline.com. The release states that the defendants were unlawfully operating a sports betting enterprise that stretched from Queens County to Nevada and from Rochester to Florida. However, BetOnline is a Panama corporation and does not offer credit to any players.

It also appears that the government has been following the Fafones for some time. A quick search provided “Operation Goodfellas” from 2002 where Joe Fafone and his father were linked to organized crime and an Internet betting operation in Costa Rica. So, it does not appear that the Panamanian sportsbook was being targeted, more like the guy the government claims to be the head man.

There is nothing new or unique about these kinds of indictments. There have been many similar charges and convictions in the past ten years. In 1999, a federal grand jury in Manhattan charged Jay Cohen, one of the owners of World Sports Exchange, with conspiracy to violate the Wire Wager Act and seven other counts. Ronnie Sacco, BetWWTS, Rick from Gold Medal and others have all been caught in the crosshairs of ambitious prosecutors looking to gain publicity in the news. All of these operations either stayed in business or been sold to reputable operators. And of course, the biggest splash ever made by U.S. officials, affecting over 70,000 bettors, was the 2006 arrest of BETonSPORTS CEO David Carruthers and subsequent meltdown of the company.

Though this is a significant arrest, does the government ever hear what they are saying? Queens District Attorney Richard Brown stated at the press conference, “In this case, I believe that we will make a significant dent in the illegal gambling nationwide.”

Really? I would wager that 95% of the players using this operation either 1) have another bookie, 2) have an Internet post-up account or 3) are looking for another bookie to play with . . . right now! The websites mentioned in the press release are all still operating and from what we have found out, will continue to operate; As will the thousands of other gambling sites that U.S. citizens can play at. And, as far as local bookies in NY and FL, I am sure that their services will be offered to any of Fafone’s alleged customers.

The bottom line is that this latest arrest is just another in a long series of government moves to stop something they can’t prevent. Illegal street bookies have been getting busted since the leather helmet days, yet every town nationwide has at least one. The largest U.S.-facing sportsbook was taken down and more sites have continued to pop up and take bets from U.S. players. Someday, we hope that the government realizes that gamblers are going to play, to bet, to wager. The only way for the government to get involved (read tax) other than the occasional arrest, is to regulate and tax the Internet industry and allow sports betting in U.S. land-based casinos. Maybe then, alleged ‘Mob connections’ won’t be booking a half a billion in wagers. But, there would also be no headlines to grab.

Ultimately, we wish all involved the best of luck in facing these charges. And, we expect this situation to play out very similar to the Jay Cohen/WSEX case, where the corporation located in Panama will continue to operate, while the alleged principles wade their way through the U.S. judicial system.

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Payouts, Payouts, Payouts. This is what is on every players mind right now, especially after several weeks of favorites winning. The OSGA inbox, Live Chat and phone lines have been buzzing with questions from players who want to know who straight answers to players’ #1 concern.

The most frequently asked question since the start of the football l season is, “Why is my book taking 5 days or up to a week or longer to get me a payout by check?”

We have gotten this question frequently but also have had an inordinate amount of players make the same inquiry regarding one of the top books – OSGA Elite-rated Bookmaker. Several Bookmaker players have been quite irate when they are told that their check will take 7-10 days to arrive – even via the more costly delivery option of FedEx, DHL or UPS. Obviously, these players have not requested a payout for some time from any book offshore. Bookmaker and MANY other books have been using similar time frames for check payouts for over a year. At least Bookmaker is very up-front about their check times and do not try to deceive the customer in any way. In fact, here at OSGA we use the 7-10 day time period as the benchmark for whether or not a book is paying fast via check. Less than a week is great and more than 10 days is a bit long. As far as check payouts, we have heard very positive feedback on both Heritage and BetJamaica where checks have arrived within a day or two.

Our Advice: Relax. With Bookmaker or any solid shop, these checks are like money in the bank. In addition, from both first hand knowledge and customer feedback, the checks from Bookmaker are like clockwork – ask for one on a Monday and have it in your hands by the middle of the following week.

Bottom Line: If you are playing with a reputable outfit, do not sweat the wait time for a check. Players may be tempted to jump ship for a book that promises a check in 72 hours. But with the ever-evolving payment processing system, there is not a single sportsbooks that can guarantee payout times – for any method.

We also have seen this question over and over again. “Who is the fastest paying?”

We usually respond with something smart – like “What day is it?”, as the payout situation is always changing. Reports indicate that YouWager is one of the fastest with Western Union payouts – generally getting them to player the next day, if request by noon the previous day. BetPhoenix does not have WU as an option right now but their MoneyGram payouts are also within a 24 hour window, many can be done same day. The typical time frame is 72 hours, most top books can guarantee a control number within 2 days of request.

Our Advice: Wait until after the payout crunch time on Monday if you do not want to become frustrated.

Bottom Line: Reputable sportsbooks want nothing more than to pay players quickly. Have some patience, as limits are in place with WU, Moneygram and checks. If your book imposes limits, they are generally being dictated by the third party processor. And, as in the response above, if you are with a top book, the person-to-person transaction is like money in the bank.

Finally, we have had several inquiries about using gift cards or re-loadable credit cards to fund an account.

These cards are becoming very popular because 1) they work and 2) they are easy to reload. Keep in mind that sportsbooks treat these deposits as credit card transactions so bonuses may be smaller and you will most likely have to fill out forms, as with any credit card transaction.

Our Advice: Re-loadable cards are a great method when they go through. Test out any new cards BEFORE you load it up with a bunch of money. AND, (very important) do not shred the card after you are done using it, while you are still playing. You may need to fax in the front and back of the card, just like with any Visa or MasterCard deposits.

Bottom Line: The re-loadable cards are growing more popular as they appear to be very effective. However, payouts can not be issued back to these types of cards, so be prepared for forms and potential delays due to getting the payout via another method.

Check back here frequently, as moving money to and from Internet gambling sites is in violation of the UIGEA. This means that until that law is repealed or changed, the payout situation and deposit method are going to be constantly in a stat of flux. If you play somewhere that has given you a fast payout, please post it in the comments below.

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