There is no denying that the gambling business is an action-packed industry with a host of colorful characters. But, the gambling landscape throughout America is changing with lawmakers, casino owners and lobbysits all getting in on the 'action'. These players fueled many stories in 2015, but it doesn't end there. Hartley Henderson lists his top 10 gambling stories of the year. This is first of two parts. To read the top 4 gambling stories in North America and see Harltey's #1 gambling story of 2015, click here.
#10 - The judgement by Kentucky against Pokerstars
While Amaya Gaming can celebrate the fact that they can now operate Pokerstars in New Jersey, they also faced a major hit when a Kentucky court ordered Amaya to pay $870 million to the Commonwealth of Kentucky for catering to Kentucky residents from 2006 to 2011. The state avoided including the time prior to the passing of the UIGEA. The original order was $290 million but that judgement was tripled as per a statute on the books. The judge also told Amaya they would be charged 12% interest per year until the debt is wiped clean.
Kentucky was first in the news in 2008 when it tried to seize 141 gambling domain names for illegally offering services to Kentucky residents. The now defunct trade group iMEGA intervened to try and quash the case but in the end they were deemed not to have standing. The websites that the state tried to seize were mostly insignificant ones but included in the list were Pokerstars.com and FullTiltpoker.com. That attempt became irrelevant on Black Friday when the FBI seized those domains and shut down the sites to American customers. Most of the other sites that Kentucky tried to seize, including Bookmaker.com and WSEX.com have become obsolete due to either the closure of the site or the choice of owners to move to a .eu, .ag or other domain that is off limits to the United States. Nevertheless, Kentucky wants its pound of flesh (and probably money it spent on fighting its ridiculous seizure attempt) so it announced this decision against Amaya Gaming. ThePoker Players Alliance (PPA) has stepped in and suggested that it wants any money Amaya pays to be given to Kentucky players who lost money playing at the sites rather than the state, which would not only send the money where it belongs, but would also limit damages, since individuals can't ask for triple penalties. But, it appears the state lawyers are doing everything in their power to quash the PPA request.
According to the state the fact that the owners of Pokerstars now are different than the ones who apparently violated state rules from 2006 to 2011 is irrelevant, but almost every industry lawyer who has commented on the case acknowledges that this is a last ditch attempt by a desperate state and no federal court would ever allow a ruling against an owner that was not involved in a crime. Moreover some industry analysts point to the clean bill of health given to Pokerstars by the DoJ for the $714 million that the Rational Group paid to the DoJ for bailing them out on Full Tilt, and federal rulings will always supersede those of an individual state. In fact some industry lawyers are suggesting that if Kentucky wants to collect they should be going after the FBI to get some of the money that was paid to them and not to Amaya since the debt for past wrongs was already paid and accounted for.
#9 Rise of mainstream bitcoin gambling sites
When bitcoin first came out it was hailed as the perfect gambling option. Untraceable, anonymous and instantaneous, bitcoin would set the industry afire. Bitcoin-only gambling sites like Seals with Clubs (poker), BTCSportsbet (sports betting) and Satoshi Dice (lottery) were extremely popular but all mainstream gambling sites avoided the crypto currency because the value of bitcoins proved to be very volatile, plus few mainstream gambling sites understood it. SwitchPoker became the first mainstream gambling site to adopt the technology for payments and 5Dimes and Diamond Sports followed a couple of years later. The experiment proved to be very successful and the value of bitcoins have remained fairly stable, convincing other mainstream sites to follow their lead. And in 2015 the number of mainstream sites accepting bitcoins skyrocketed. Bookmaker/CRIS, Heritage Sports, Intertops, BetOnline, Sportsbetting.com, WagerWeb and Just Bet all decided to accept bitcoin as a form of payment and a slew of new bitcoin only sportsbooks and casinos followed suit. Most mainstream casinos and poker sites have not accetped the virtual currency, although almost every sportsbook has casinos and poker. One thing that is very noticeable is that those anxious to accept bitcoin as a payment option have done so to provide American customers a chance to deposit and withdraw with their site without having to deal directly with banks. A manager at Heritage Sports told OSGA that they love bitcoin as a payment option because it was easy and fast and almost resembled the old Neteller days.
Non U.S. facing sites have not adopted the crypto currency but ironically Neteller does allow payments in bitcoin which is immediately converted to other currencies and as a result players at sites like Bwin, William Hill, Bet365, etc. can still technically deposit in bitcoins. The list mentioned is not inclusive and it is expected that in 2016 a whole host of new sites will come aboard and allow bitcoin payments since the innovators showed that the crypto currency is a viable payment option despite the volatility in the currency.
#8 the ongoing Pete Rose saga
2015 was not a good year for Pete Rose. The man who looked like a shoo-in to be named to Cooperstown as a result of being the all-time leader in hits, singles, at bats and games played was kicked out of baseball in 1989 when it was revealed that he bet on baseball games as a manager for the Cincinnati Reds. He was ruled ineligible for the Hall of Fame in 1991. Ever since then Rose has done everything in his power to have that decision reversed. At first he denied ever betting on baseball but investigations showed that in fact he did in fact bet on baseball for amounts starting at $10,000 per game. The commissioner at the time of Rose's suspension, Bart Giamati, made it clear that Rose had no opportunity for reinstatement and every commissioner since has upheld that ruling. John Dowd did an investigation into the case and suggested that Rose probably did bet on games involving the Reds while managing them, an infraction that no one would ever forgive, but Rose always maintained that he bet only on games that didn't involve the Reds, when he recanted his original claim that he avoided betting on baseball. Rose later admitted to betting on games that involved the Reds but only as a manager and only on the Reds to win.
In 2009 commissioner Bud Selig indicated that he was considering lifting the ban against Rose, but Selig never acted and Rose remained banned from baseball and Cooperstown. Rose had hoped that he had a new life when Rob Manfred was announced as baseball commissioner and his hope was enhanced when Fox Sports hired him on as a guest analyst indicating the league may be softening its position. Many suspected the new attitude was in response to the deal the league had with daily fantasy sports sites and also to help deflect criticism against the sport for all the doping infractions. By all accounts Manfred was willing to seriously consider lifting the ban, but in June ESPN concluded an investigation into Rose and proved and produced documents showing that Rose bet on games involving the Reds as both a manager and a player from 1984 to 1986. There has never been any proof that Rose bet against the Reds, but the fact there was irrefutable proof he bet on the Reds at all effectively diminished any chance of reinstatement. Experts showed that a player or manager betting on their team could greatly influence the result of the game by taking stupid chances or making questionable moves to ensure they win a game and the experts even pointed to the liberal European leagues where rules are in place that prohibits anyone involved in a game from betting on that game or facing suspension, in order to ensure that the results of the match are not called into question.
Rose met with Manfred in September and hoped that the ESPN story would not damage his hope for reinstatement but Manfred had no choice and in December Manfred announced he would not lift Rose's ban.
# 7 The ongoing trouble for Atlantic City casinos
At one time Atlantic City was the place to go to gamble in the northeast and it attracted the same type of customer base that Las Vegas did. But that changed as casinos began opening in nearby states like Delaware, Pennsylvania and Connecticut and as racetrack slots opened in almost all states. Suddenly the gambling monopoly that Atlantic City had in the northeast disappeared. The trouble for the city was exacerbated by the financial crisis in the late 2000s and suddenly casinos were having trouble making a profit. The Sands casino closed in 2006, but most of the other casinos managed to stave off closure until 2014. Last year four casinos on the boardwalk closed, the Atlantic Club, the Revel, Trump Plaza and the Showboat and in 2015 three casinos on the boardwalk, the Taj Mahal, Caesars and Bally's had to file chapter 11.
As for the other boardwalk casinos The Tropicana seems to be doing ok, mostly due to a large following online for its casino product and Resorts Casino was given a new lease on life thanks to its partnership with Pokerstars, but even they could be in trouble in the future unless there are some major events that bring people back to Atlantic City. The 3 marina-based casinos, the Golden Nugget, Borgata and Harrah's seem to have staved off the same fate as those on the boardwalk, although again it could be short lived unless things change. New Jersey governor Chris Christie seems to be grasping at straws to try and make Atlantic City profitable again, including injecting more money into the city and continuing to push for legal sports betting, but it likely won't be enough. Most in the industry simply believe that with casinos available in larger local cities few will travel to Atlantic City to gamble and those who do, won't spend money in other ways. As a result some, including myself, are wondering if the best thing to do at this point would not be to simply acknowledge that gambling in Atlantic City has run its course, to clean up the city and promote it as a convention town and as a travel destination for families, which of course would mean closing most of the remaining casinos, particularly on the boardwalk.
#6 Pokerstars finally gets a U.S. license
The Pokerstars story is legendary. The largest online poker compan,y bar none, had their site seized, along with Full Tilt Poker by the FBI on Black Friday. They paid off all customers, shut down the site to Americans and reopened in the rest of the world. Full Tilt was later proven by the U.S. government to be a Ponzi scheme and couldn't pay its customers, so in an effort to bail out the federal government the owners of Pokerstars paid $714 million to the DoJ, which involved buying all the assets of Full Tilt so that customers could be paid and the remainder was kept by the DoJ as a fine for past wrongs. In exchange the U.S. government gave Pokerstars a clean bill of health so that they could operate in the U.S. if and when a legal online market opened up.
The Rational Group, who owned Pokerstars and the new Full Tilt soon realized that clean bill of health was worthless. The company was blocked by New Jersey from purchasing the Atlantic Club casino which would have enabled them to operate in New Jersey (a nd save the casino from closure). The reason given was "past wrongs", they were branded as "bad actors" by native groups in California because of these same past wrongs and it appeared they were going to have to wait at least 2 years before ever applying again anywhere for these same past wrongs and Kentucky has gone after them for damages as a result of past wrongs. Despite paying off the federal government the state of New Jersey cited pending charges against the company owner Isai Scheinberg for why they didn't qualify for a license and the Rational Group finally threw up their hands and agreed to sell the company to Canadian-based Amaya Gaming for almost $5 billion. The hope was that since Isai Scheinberg was no longer an owner of Pokerstars, the government would remove their objections against the company.
It seemed to work. The New Jersey Division of Gaming Enforcement (DGE) removed their stated concern and in October the DGE finally gave the OK for Pokerstars to operate in the state. Pokerstars will partner with Resorts Casino in Atlantic City and begin operating at the beginning of 2016.
The question now is whether it will make a difference. Interest in online poker in New Jersey has been a dud to say the least. UltimatePoker closed due to lack of interest and the other two sites offering poker – WSOP.com, operated by Caesars, and Borgata, operated by MGM, have maxed out at 400 players. And most people interviewed in New Jersey stated a lack of interest in Pokerstars getting a license because they don't see the current operation as the real Pokerstars. Perhaps Pokerstars will be more successful than expected, but most likely poker will never be popular in the U.S. until there is a full nationwide network where volume will make the product appealing . . . like Pokerstars was in the past.
#5 Sheldon Adelson's testimony in Steven Jacobs wrongful dismissal suit
Steven Jacobs first filed a lawsuit for wrongful dismissal by The Sands Corporation in 2010, but it was only in May 2015 that all parties appeared in the Cook County district Court to hear arguments and determine whether the case should be heard in Nevada or in Macau. The Sands' lawyers were successful in delaying the hearing for years, but in 2015 a Nevada County district court heard the testimony and brushed off the latest attempt to stall it again. The case could have gone away had The Sands simply settled with Jacobs at the beginning, but Sheldon Adelson insisted that he had no intention of paying off a man who he claims was disloyal and tried to ruin the Macau operation. In the documentation leading to the hearing Jacobs contended that he was let go because he would not agree to unscrupulous and illegal practices in Macau, while The Sands responded by saying that Jacobs committed 35 transgressions, most being related to the fact that he would not follow company orders.
At the hearing the testimony presented by Jacobs' lawyers was damning against The Sands to say the least. Documents showed that The Sands cooperated with known gangs, they paid bribes to the Chinese government for favors using a lawyer they paid $700,000 a year to initiate the bribes, and that The Sands allowed a prostitution ring to run from their casinos. According to records Jacobs tried to stop these activities and for his efforts he was terminated.
Sheldon Adelson went on the stand to testify for The Sands (apparently at his own insistence) but instead of denying the activities stated by Jacobs or defending them he instead tried to turn the tables on Jacobs and it backfired. Adelson not only admitted to many of the contentions by Jacobs, but he said that Jacobs tried to make himself out to be more important by "squealing like a pig to government authorities." Instead of denying the involvement with gangs Adelson instead admitted the company did use them. He suggested that trying to stop this from continuing was an attempt by Jacobs to bankrupt the company, because it made up to 60% of their business. And instead of denying the prostitution charges he simply said that's how things are done over there. Moreover Adelson constantly argued with the judge in the case, hurting The Sands defense. In the end few in the court room were sympathetic with Adelson and the judge ruled that the case should be heard in Nevada. In typical fashion The Sands hired Alan Dershowitz as part of the defense team to argue to the Nevada Supreme Court that the district judge was biased and should be dismissed and that the case by Jacobs should be thrown out because the activities took place in Macau and should be heard there. To date the Supreme Court has not ruled, although every lawyer I spoke to said that the Supreme Court almost certainly will uphold the district court decision and the judge will continue on.
What makes this story so important is that it shows that The Sands has operated illegally in Macau (under U.S. laws) and consequently both the DoJ and the SEC have launched an investigation into The Sands to see whether the company should still be allowed to operate in the United States, let alone Macau. If indeed the DoJ or the SEC chooses to lay charges against the Sands, Adelson will have only himself to blame for being so arrogant and narrow minded by allowing all the facts to be presented in court rather than settling with Jacobs at the beginning.
To read the top gambling stories in North America and see Harltey's #1 gambling story of 2015, click here.
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