Archive for the ‘Regulation’ Category

Trump, O’Malley, Barton Clash Over Online Gambling Issue

Friday, November 4th, 2011

The Apprentice Season 3We probably write about Donald Trump way too often here on OCS, but he is very talented at inserting himself into the news. Lately he has made it known that he wants to invest in the online gambling industry. As we reported earlier, Trump Entertainment is taking part in a joint venture to create an online gambling site with the Trump name to take advantage of regulation when it happens. That puts him at odds with some, though.

There are many attempts to regulate online gambling in one form of another in the United States, some at the state level and some at the local level, some just on poker, and some on all gaming. Trump supports the bill by Texas Republican Representative Joe Barton, which would regulate all online gambling at the federal level. Trump is lobbying hard for the bill’s passage. Ivanka Trump, executive vice president of Trump Entertainment, says that “it would be a tremendous source of taxable revenue for states or the federal government and an enormous generator of jobs.”

Others aren’t so sure. Maryland Democratic Governor Martin O’Malley sent a letter to the House of Representatives, urging them to vote against Barton’s bill, saying that it would hurt the states. O’Malley says that in Maryland, federalized online gambling could cost the state “the $519 million annually we generate from our state lottery – our state’s fourth largest source of revenue – and jeopardize the jobs and survival of lottery retailers, many of which are small businesses.”

Many other state governors and lawmakers share O’Malley’s concerns. For the states to not be hurt by the federal regulation, the legislation needs to be written in such a way that the states can get a cut of the proceeds. Trump disagrees, saying that federal regulation would be beneficial nationally and at the state level. Trump has a lot of influence in Washington (look at how he has abused eminent domain to build his empire), so it will be interesting to see which side wins the debate.

Massachusetts Gambling Talks Closed to Public

Thursday, November 3rd, 2011

massachusetts-location-mapOn Tuesday, the Massachusetts House Ways and Means Committee voted unanimously to close the rest of the gambling bill negotiations to the public. The most contentious issues of bills are often handled by committee and the Massachusetts legislature has made it a common practice to close those talks to the public.

The bill would sanction three resort casinos and one slot parlor in the state, with the license for each subject to competitive bidding. Last year, the legislature passed a similar bill authorizing three casinos and two slot parlors at racetracks, but Governor Deval Patrick killed the bill. He is said to be onboard with the current legislation.

One of the points of contention is a provision in the bill that would bar lawmakers from working in the casino industry for a year after they leave public office. That provision is intended to combat corruption by making it so that lawmakers can’t give a favor to a company they plan to work for as soon as they leave office. Some in the House disagree with it, though. Democrat Joseph Wagner said it is tying “one or both hands behind our backs by limiting ourselves.” He also said that making lawmakers wait one year before working in the casino industry would be to “preclude the best and brightest from being eligible.” He even went so far as to say that lawmakers should be allowed to work for casinos even if they are “in the government presently.”

The House will begin a seven-week recess on November 16. Source in the House of Representatives say they are “hopeful” that the negotiations will be completed before then. Once the bill passes the legislature, it is likely to be signed by Patrick unless there have been major changes to it.

Entrepreneurs Betting on Online Gambling Regulation

Tuesday, November 1st, 2011

mgm-resorts-internationalThe tea leaves seem to say that federal online gambling regulation is coming soon to the United States. There is the fact that it is a way of cutting into the national debt without raising taxes. There is the fact that the House of Representatives has held a hearing on the impact of regulation. And now we have a lot of rich entrepreneurs looking to get into the action.

As reported earlier on, Donald Trump’s Trump Entertainment is entering a joint venture with Avenue Capital Group to offer online gambling once regulation legislation is passed. Trump isn’t the only big name to get prepared for eventual regulation, though. On Monday, two Las Vegas-based casino companies announced that they are forming a company with one of the largest online gambling companies in the industry.

Boyd Gaming and MGM Resorts International, both major players in the Las Vegas casino scene, announced that they will create a new entity by joining bwin.Party. In the new company, which is not yet named, bwin.Party will own 65% of the company, with MGM having 25% and Boyd the other 10%. Jim Murren, CEO of MGM Resorts, said that the decision is an “anticipatory” move that will take advantage of the new American online gambling market when it is created.

Another big land casino/online gambling joint venture involves Mirage Resorts. CEO Richard Bronson got the ball rolling two years ago because he thought regulation was inevitable. Not all of these types of ventures work out. Steve Wynn’s deal with PokerStars certainly backfired. Still, it’s a good sign that the big players in the American industry are starting to invest capital in the potential market.

Would Online Gambling Hurt State Revenue?

Monday, October 31st, 2011

congressAs the U.S. federal government desperately searches for ways to trim the national deficit, reduce spending, and increase revenue, online gambling has become a hot topic. Last week, the U.S. House of Representatives held a hearing on regulating the industry, presided over by Republican chair Mary Bono Mack, a proponent of regulation.

There are many objections to federal online gambling regulation from many different groups. There are the groups who oppose all gambling on moral grounds. There are the tribal groups who are worried about losing business at their tribal brick and mortar casinos. And now we are starting to hear more opposition from leaders in state governments.

Maryland Governor Martin O’Malley wrote a letter to Congress, saying that in Maryland “federalized poker and casino gambling would put at risk the $19 million annually we generate from our state Lottery – our state’s fourth largest source of revenue – and jeopardize the jobs and survival of lottery retailers, many of which are small businesses.”

It is a very real concern. Just as online versions of other businesses have become tough competition for their brick and mortar counterparts (think of the effect), the same could happen with gambling. If people can play their favorite games online from home, would fewer people make a trip to state casinos? Probably.

That is why it is important for the states to get onboard with the regulation. If online gambling regulation happens at the federal level, states need to be involved to get a piece of the pie. Many states, such as New Jersey and California, are attempting to pass their own laws regulating online gambling. If no federal regulation is passed, the states could only allow gambling to take place within state borders. That limits the size of the casino’s customers, but at least there is no federal encroachment. If the federal government regulates the industry, though, the state-licensed online casinos could accept customers across the entire country (and possibly internationally). The feds would get some of the tax revenue, but the state would as well.

The great challenge facing lawmakers is not whether or not to regulate the online casino industry. Most people believe that will happen eventually, and probably soon. The challenge will be finding out a way to benefit everyone, so the states and tribal casinos don’t suffer.

Congress Holds Online Poker Hearing

Wednesday, October 26th, 2011

mary-bono-mackPerhaps Congress is really serious about trying to regulate online poker in the United States. On Tuesday, a panel of the U.S. House of Representatives held a hearing on regulating interstate online poker. The hearing was chaired by Representative Mary Bono Mack (R-CA), a proponent of regulating the industry.

The hearing saw testimony from a number of witnesses related to the industry, including Poker Players Alliance Chairman Alfonse D’Amato, a former New York senator. D’Amato and others testified that there is currently nothing preventing Americans from playing poker online at overseas online poker rooms. By not regulating it, the United States is simply losing out on the tax revenue and the ability to ensure that the websites are safe. It is estimated that Americans wager $16 billion on online poker per year.

Echoing the fact that the attempted prohibition isn’t working, Mack said that “to stand in the way of the Internet can create consequences that are impossible to recover from.” Fellow Republican Joe Barton (Texas) said that poker is an “All-American game” that is enjoyed by many, including President Obama.

The most outspoken opponents of regulation are those representing tribal gambling. Ernest Stevens Jr., chairman of the National Indian Gaming Association, testified that “tribes are concerned that legalized Internet gaming will threaten their gains.” The tribal casino industry brings in $26 billion each year. The tribes are worried that increased access to online gambling will cause many of their customers to simply play from home instead of visiting the casinos.

Barton is the lead sponsor of HR 2366, which would regulate the online poker industry by creating an Office of Internet Poker Oversight. His bi-partisan bill is co-sponsored by Republican Ron Paul (Texas) and Democrat Barney Frank (Massachusetts).

NC Court to Judge Sweepstakes Machines

Tuesday, October 25th, 2011

north_carolina_state_mapNorth 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.

Donald Trump Online Gambling Venture

Thursday, October 20th, 2011

The Apprentice Season 3If 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.

Tribes Mulling Online Gambling Partnerships

Thursday, October 13th, 2011

connecticut-location-mapAs reported yesterday on, 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.

Free Poker Websites Target California

Wednesday, October 12th, 2011

californialocationmapWith 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 In September, the Barona tribe launched an online poker game on its website,

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,, in the United States, so in order to advertise in the U.S. they ran ads for a free version of the site,

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.

Alderney Regulators to Conduct Review

Tuesday, October 11th, 2011

full-tilt-poker11The 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.