North Carolina’s Court of Appeals will finally make a definitive (as least, until it is appealed to the Supreme Court) decision on the legality of sweepstakes machines. The decision is being anticipated by people on each side of the issue, as a legal gray area has complicated things for some time.

Gambling cafes offering sweepstakes machines have been a source of controversy across the United States, including in North Carolina. Some cafes offer Internet sweepstakes games where gambling is not legal. They claim legality of the business by saying that customers are paying for time on the Internet, rather than directly making wagers. Other times they are physical sweepstakes machines, with the argument being that they are not gambling games as defined by the law.

In North Carolina, in 2007 the legislature passed a law banning traditional video poker machines, which had been operated in the gambling cafes. The ban was strengthened with new laws in 2008 and 2010 that more clearly defined what games are banned. The gambling cafes, however, have continued to operate sweepstakes machines. According to the business owners, the games are not gambling machines and therefore do not violate the law. They say that letting customers use the computers to uncover potential prizes, including cash, is a marketing gimmick to sell Internet and phone time. It is not gambling, they say.

Last year, state trial courts took the case after the government tried to shut down the businesses and the business owners sued. The courts gave different decisions, with one ruling on behalf of the cafes and one ruling that the games are illegal. The cases were then appealed to the state Court of Appeals. Today the court will hear the first arguments for the case.

If online gambling regulation is passed in the United States, Donald Trump wants in on the deal. The iconic businessman, perhaps best known for his hair, firing people on TV and criticizing Barack Obama, will form an online gambling joint venture with Avenue Capital Group to offer online casinos in the U.S.

Avenue Capital took control of Trump Entertainment last year during bankruptcy. According to an October 14 regulatory filing, Trump Entertainment and Avenue Capital would start a joint venture in the event that state or federal regulation in the United States takes place. Trump owns casinos in New Jersey and Iowa, two states that are considering regulating the online gambling industry.

Ivanka Trump, Donald Trump’s daughter, told Businessweek that it is “just a matter of time” until the U.S. regulates the online gambling industry. Americans wager an estimated $6 billion each year online, and that money is not being taxed and the casinos are not paying any licensing fees to the cash-strapped governments.

For Trump and Avenue Capital, it is important to get into the game right away and be prepared for regulation. Once one state regulates the industry, Ivanka Trump says, “there will be a domino effect, the same way lotteries started in the 1960s.”

The biggest problem for any new online gambling site is developing name recognition. While opening the website doesn’t take much money, companies spend a lot of money promoting and marketing the casino so that it becomes a known product. The hope is that the Trump name will make that a lot easier and give the online casino instant name recognition.

As reported yesterday on OnlineCasinoSuite.com, free poker websites are being used to influence policy in California, trying to lead to online poker regulation in the Golden State. It is not only happening in California, though. Two tribal casinos located in Connecticut are also exploring partnerships with online gambling companies as a way of getting a leg up on the competition in the event that the U.S. opts to regulate the industry.

Has been reported that Foxwoods Casino, owned by the Mashantucket Pequot Tribe, and the Mohegan Sun Casino, owned by the Mohegan Tribe, are close to reaching deals with overseas online gambling operators. Foxwoods is working out a deal with Sportingbet, an online betting company located in England, while the Mohegan Sun is in talks with various online gambling companies.

The plan for both tribal casino owners is to launch free-play online casinos or poker sites in the United States. The hope is that the companies will generate a customer base and name recognition through the free online sites, which they could parlay into profits if and when new regulation allows them to launch real-money gambling sites.

Bill Satti, the director of public relations for the Mashantucket Pequot Tribe, would not comment on the discussions, but did say that the tribe is investigating online gambling possibilities due to the “significant momentum and discussion it has garnered recently in the U.S.”

Chuck Bunnell, chief of staff for the Mohegan Tribe, said that the entire gambling industry is looking at changes in Europe and the United States in regards to possible liberalization and regulation of gambling laws. “Part of our due diligence is to prepare for that possibility,” he said.

With the U.S. state of California likely to take up the issue of regulating intrastate online poker next year, the industry has taken another step toward persuading the Golden State. Free poker sites are being launched to target Californian residents, all as part of a ramping up of the poker industry’s influence.

On October 10, a tribal gaming group, made up of the Morongo and San Manuel bands of Indians, launched a website called CalShark.com. In September, the Barona tribe launched an online poker game on its website, Barona.com.

Ryan Hightower, a spokesman for the California Online Poker Association, made the purpose of those free online poker sites clear. “This is pretty much what online poker would look like as a real money game,” he said, indicating the free sites. “It will absolutely serve as an example of the popularity of online poker in California.”

Using free poker websites to gain influence and exposure is nothing new for the gambling community. Many real money online poker rooms use free poker sites in jurisdictions that don’t legally allow the real money sites. For example, PokerStars was not allowed to advertise its real money poker site, PokerStars.com, in the United States, so in order to advertise in the U.S. they ran ads for a free version of the site, PokerStars.net.

Two separate bills to regulate online poker in California were tabled earlier this year and won’t be addressed in 2011. However, the state legislature is expected to take up the issues again in the next legislative session, beginning in January.

The online casino industry has been hurt in many ways by the Full Tilt Poker scandal. The most damage that it did, though, is in hurting the confidence of the players and of those working within the industry itself. Though they had problems before, Full Tilt had a pretty good reputation and was one of the largest online gambling companies in the world. The fallout from the scandal has been far reaching.

The most recent casualty is the Alderney Gambling Control Commission. As the regulatory body that licensed and oversaw the operations of Full Tilt Poker, they were responsible for ensuring that the company was engaging in legitimate business practices and making sure that it was a safe website for players. As it turns out, neither was the case.

Last month, the Alderney Gambling Control Commission revoked Full Tilt’s license, saying that the company misled the commission. According to the regulators, Full Tilt had continuously lied about their finances. According to the commission, Full Tilt repeatedly reported nonexistent funds, saying there was money to cover the online bets that was not actually there. Federal prosecutors have accused Full Tilt of running a Ponzi scheme, by spending money in player’s accounts rather than keeping it there in a protected state.

The Alderney regulators say that they were kept in the dark about Full Tilt’s disreputable practices, but that doesn’t inspire confidence. While you certainly wouldn’t want them to have allowed Full Tilt to operate had they known the facts, their ignorance is just as dangerous as collusion. In response to the problem, the commission’s executive director, Andre Wilsenach, said that the commission will launch a review of their practices and policies to determine what went wrong. “We will certainly review our processes in the light of this particular experience and we might introduce changes if we find that there’s things that we could do better from our side,” he said.

A long-awaiting report on online gambling in the U.S. state of Iowa was recently released. The report, based on a study conducted by the Center for Social and Behavioral Research at the University of Northern Iowa, paints a picture of Internet gambling’s presence in the Hawkeye state.

The report was requested in advance of debate over legislature to authorize and regulate online poker at the intrastate level. The legislation is expected to be debated in the next session, which begins in January. According to the researchers, approximately 5% of Iowa adults admit to gambling online, with 2% of them saying they have done it within the past 12 months. The number seems a little low, but may be skewed by a number of biases, including the fact that many people would not answer honestly about doing something they think may be illegal. Problematically, the research also showed that 4% of minors in 6^th, 8^th and 11^th grade reported that they have bet online over the past year.

Given that the online gambling prevalence among minors is almost as high as among adults, creating adequate protection against underage gambling must be an important part of any state regulation. The researchers also believe that an increase in availability of online gambling would lead to an increase in problem gambling, so protections against that must also be a priority.

A second report by the Iowa Racing and Gaming Commission is due on December 1. That report will deal with the task of regulating online poker and how it should be done. The expectation is for a vote to be held on the intrastate online poker bill sometime in 2012.

South Africa’s high court upheld a ban on online gambling, rejecting an appeal by Piggs Peak Casino. It was part of a long process of challenges by Piggs Peak that eventually lost. The casino has said that by losing the appeal, they have run out of challenges and will have to abide by the court’s decision.

On the Piggs Peak Casino website, there is an important notice saying that because they lost the appeal, their various companies – including Piggs Peak Casino, Piggs Peak Poker, Piggs Peak Bingo, and Volcanic Gold Casino – “will no longer accept bets from any players in South Africa.” Any South African players who have a positive balance at any of those online gambling sites are advised to make a withdrawal.

South Africa had a de facto ban on online gambling simply because the government does not give out licenses to run legal online casinos. In 2008, the National Gambling Amendment Act was signed into law. That law would allow licenses to be issued to online casinos operating in South Africa. The law has not yet been implemented, though, and no licenses have been issued. Some believe that the government was awaiting the outcome of the Piggs Peak appeal.

Piggs Peak Casino is a legal and licensed casino company running in Swaziland, a country in southern Africa that is bordered on the north, south and west by South Africa. With the lost appeal at the Bloemfontein Supreme Court of Appeals, Piggs Peak will no longer accept customers from South Africa, but if the government begins issuing licenses, the company is likely to seek them. Anyone found guilty of gambling online illegally in the Republic of South Africa can be punished by a fine of up to R10 million or up to 10 years in prison.

In a blow to the online gambling industry and anyone who wants a liberalized market, Germany’s highest court on Wednesday ruled in favor of the state monopolies. On Wednesday, Germany’s Federal Court of Justice upheld the nation’s ban on private-sector companies operating online gambling sites. The ruling protects the monopolies at the expense of competition and free enterprise.

Currently Germany’s 16 states control the online casino market with their monopolies. Private operators are not allowed to do business in the country and are banned by law. Online gambling operators throughout the world, and particularly in Europe, are pushing for a liberalized market that allows private competition, especially offshore private competition.

The ruling by the Federal Court of Justice can only be overturned by Germany’s constitutional court. The law banning private competition can also be amended or repealed. In the meantime, the 16 states are currently negotiating a gambling treaty. As part of the treaty, they have proposed awarding up to seven licenses for sports betting companies that could operate nationwide.

While Germany’s highest court upheld the monopolies, the European Union’s highest court disagrees. Last year, the European Court of Justice ruled that the state-run monopolies are not compliant with EU rules and said that the industry must be liberalized.

One German state, Schleswig-Holstein, has split from the other 15 states when it comes to the gambling treaty. The state voted to regulate online gambling at the state level and will adopt rules that are more generous than those proposed by the other states. Schleswig-Holstein hopes to become the gambling hub of Germany and is already being called the “Las Vegas of the North.”

On Monday the Nevada Gaming Control Board held a hearing on proposed regulating for intrastate online gambling. The regulations would only take place if the federal government opts to allow it, so it will be a moot point if Congress doesn’t change its mind on the industry. Still, the law passed by Nevada earlier this year required the state to put regulations in place by January 31. Monday’s hearing was a step toward accomplishing that.

The proposed regulations were released at the end of August. On Monday, the Gaming Control Board spend over an hour talking to the public, including gaming lawyers, consultants, and representatives from Nevada’s casinos. Mark Lipparelli, chairman of the Gaming Control Board, said that the board is planning to hold additional public hearings in November and then vote on regulations in December.

Lipparelli said that the board currently has “a solid foundation for regulations” and that proposals from industry professionals resulted in some “cleanup language revisions and changes.” The board received comments on the proposals by a number of companies, such as Cantor Gaming, International Game Technology, Caesars Entertainment and Boyd Gaming Corporation. Most of the companies that commented on the proposed regulations have asked their comments to be private.

In one of the questions of concern to the casino operators, the board stated that anyone who currently has a Nevada gaming license would have to apply for and pay for a second license to operate an Internet casino. Currently the major casinos pay $500,000 for their initial license and then another $250,000 each year.

Trying to get their fiscal situation in order, the U.S. state of California is considering legalizing and regulating online poker. Two separate bills that would accomplish that have been delayed until the state’s next legislative session in 2012, but proponents of the legislation are pushing as strong as ever.

On Saturday the Field Poll released survey results in one of the first indicators of the public’s feelings toward regulated online gambling. The poll found that the majority of Californians are supportive of regulating the game in order to bring more revenue to the state. According to the poll, 53% of registered voters favor regulating online poker, while 41% oppose it and 6% have no opinion.

Age, gender and political party played a part in the results. 73% of voters between the ages of 18 and 39 favor online poker regulation, with only 25% opposing it. Support among voters aged 40 to 64 falls to 48%. Only 35% of senior citizens favor online poker, with 57% opposing it. Politically, 56% percent of Democrats favor the legislation versus 43% of Republicans. 58% of men support it versus 49% of women. Most obviously, people who play poker are more likely to support it. The poll showed that 66% of voters who have played poker in a casino support online poker regulation. For those who have never played poker in a casino, only 50% support it, 44% oppose it and 6% have no opinion.

Though the numbers are not overwhelming, having a majority voter support for an issue can help lawmakers as they try to pass the bills next year. It may be tougher for Republicans like John Campbell, though, with 49% of their base opposing it.

One thing is for sure, though. California needs the money. Over the years, the state has mismanaged its economy about as badly as possible. The state is $375 billion in debt, has a 19% debt to GDP ratio, and a budget deficit of approximately $10 billion.