Gaming Control Board to Help Olympics ; U.S. Online Poker Worth 2 Billion Plus ; Borgata Tourney Shut Down; DOJ and NJ

nevada gaming control board

 

Nevada Gaming Control Board To Help Olympics Combat Cheating

Agreement Calls For Info Sharing As Winter Games In Russia Approach

by Brian Pempus  www.cardplayer.com

Nevada gaming regulators and the International Olympic Committee announced Tuesday that they have reached an agreement to help combat cheating in sports.

The arrangement calls for both parties to share information and “work towards maintaining the integrity of sports by preventing the manipulation of sports competitions with the intention of achieving unfair winnings.” The two have worked together in the past.

Silver State sports books can take action on Olympic events.

Nevada Gaming Control Board member Shawn Reid said in a statement: “The Gaming Control Board is honored to be a partner with the International Olympic Committee in the fight against irregular and illegal betting in sports. Nevada is regarded throughout the world as the gold standard in gaming regulation and part of that reputation is tied to the Board’s tireless efforts to thwart illegal and irregular betting in general and we are glad to put forth that same level of effort in eradicating illegal and irregular betting in sports specifically.”

The IOC said in a statment: “This information will be used by the IOC’s newly established ‘Integrity Betting, Intelligence System’ (IBIS), which will be in operation for the first time in Sochi. IBIS collates alerts and information on manipulation through betting on sport, and will also be placed at the disposal of International Federations during their major championships…part of our concerted strategy to support clean sport and protect major competitions from any form of manipulation, particularly those linked to betting. We are very pleased with these agreements, which build on our successful collaboration during London 2012.”

The XXII Olympic Winter Games (Sochi) 2014 begin on Friday, Feb. 7.

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online poker 2012

U.S. Online Poker Market Could Be $2.2 Billion A Year Under Nationwide Industry

America Still The Dominant Web Poker Player In The World

by Brian Pempus  www.cardplayer.com

Legalized online poker is slowly, but surely, coming to the United States. Right now, three states — Nevada, New Jersey and Delaware — have online poker up and running in their respective borders. More are expected in the near future (maybe none in 2014, though).

While the poker boom, which started around a decade ago, has ended, the U.S. online poker market could be set for a comeback. Card Player had the chance to speak with Dr. Kahlil Philander of the University of Nevada Las Vegas, who has done research on the size of the U.S. online poker market, to talk about some of the things that could be in store.

Brian Pempus: Can you talk about some of the estimates of the U.S. online gambling market?

Kahlil Philander: Well, my research has only been with online poker. As for online gaming in general, my take is that there are a lot of numbers out there that are probably overly optimistic in general. And that’s probably pretty consistent with what we’ve seen come out of New Jersey, just as far as the end of November and full December numbers, which were the first real test of a population big enough to hold a reasonably-sized poker market and also a market that has online casino games and online slots. So, I mean that’s sort of a general perspective. But in terms of trying to benchmark online poker, in particular, and comparing it to where the market was previously, I certainly think that if there was widespread adoption of legal online poker the market would certainly be larger than the previous peak, which was sort of the post-UIGEA, but pre-Black Friday, era. If you go by PokerScout’s numbers, which are considered the best in the business…you could easily exceed that by quite a bit.

BP: Do you have an estimate on the size of the U.S. market if online poker was legal everywhere?

KP: If there was a national network, my forecast was around $2.2 billion during the first year. That’s assuming there would be liquidity between all those players. If somehow Congress passed a bill or every state legalized it simultaneously on their own and had compacts.

BP: There was some indication in the past that California, with the largest population of any U.S. state, might want to isolate itself and have its own online poker industry and not share liquidity with another state. Do you think this could be viable for California?

KP: They are a big enough state to where they could create a viable network on their own, but they would always benefit from allowing people in from other areas and other time zones to also participate. But there’s some protectionistic ideas behind them sort of taking that approach. One of the issues with interstate deals is where do the servers have to be located. There are a certain number of jobs associated with that infrastructure, so there’s an interest in having that within your own borders. So part of this is politicking and trying to reap the economic benefits. If you really look at it in terms of the long term, mostly everybody can benefit from having shared player pools. It’s just the negotiations that have to happen in the interim. I’m fairly confident that in the end that’s the situation that we are going to get to, should these states decide to adopt legal online poker.

BP: What kind of timeline would you give for there to be a true U.S. online poker system?

KP: That’s a tough question. Five years ago a lot people thought a national network was going to pop up in a year. It is really hard to predict these types of things. They do take time. It doesn’t look like California, for example, will have anything passed in 2014, but you never know. When you try to think about gambling adoption, and Internet gambling adoption in particular, there’s a few things that can preempt things being legalized or banned. In terms of general gambling, one of the biggest things is whether there is a public revenue shortage. So as things get further and further and away from the financial crisis — the Great Recession — that makes less of an impact, but it certainly did help provide this wave of adoption in Nevada, New Jersey and Delaware. But you also need things like political motivations, obviously an interest by players and other stakeholders. There needs to be that cultural interest in having gambling adopted. So you wouldn’t see it in Utah or Hawaii. And then the technological infrastructure. So the issue here is that some states might want to sit back and see how things develop in Nevada and New Jersey. See if this geo-location is accurate as they might want it to be, and what hiccups arise. Certainly if New Jersey continues to grow quickly and a lot of revenue is generated, that may accelerate some timelines in other states.

BP: Now, we’ve seen PokerStars exist as an industry leader for quite some time, but they haven’t been able to gain access to the United States again yet. Let’s say the firm never returns to the U.S., do you think it could be dethroned so to speak from its top spot?

KP: It’s hard to say. PokerStars is in a fairly entrenched market position, internationally. There are a lot more markets in Europe…if one or two dominant firms emerged in the U.S., and international compacts were available and they could farm out and create an international network between their U.S. sites and European sites, certainly there is potential for them to acquire some market share from PokerStars. I mean, yeah it’s possible PokerStars could lose some market size, but they do have a lot of good will among the poker community, good software and they already have a large network, which regardless of what happens in the U.S., is still going to have a lot of liquidity. It’s hard to say there’d be a significant risk for their business, but projecting out more than a couple of years is always a challenge.

BP: Going along with that, how does the U.S. market compare to the global online poker market?

KP: The U.S. is the world’s largest economy. It also has widespread Internet and broadband access which are sort of the two biggest things in determining the value of a market. I was looking at a paper by Ingo Fieder and Ann-Christin Wilcke, called “The Market for Online Poker.” Ingo and myself looked at the North American market, but he also looked at sort of the global market, and the market share of the USA in 2010 in poker was 27 percent. It is a massive piece of the puzzle. There are a lot of people in the country, people with discretionary income and who have Internet access.

BP: Since most Americans are familiar with online poker, would you think that online poker as a percentage of overall online gaming revenue for a U.S. state would shrink over time as people become more familiar and comfortable with other games on the Internet?

KP: Well, some people thought that initially the casino games would be much larger than poker right out of the gate. In New Jersey, the first number that came out wasn’t all that much different. Casino games had a slight lead in overall market revenue over poker, but wasn’t that large. I think the big issue in the US will be whether states chose to adopt all sorts of casino games, or whether they only adopt poker. That will be the primary issue in terms of how it gets divvied up between the different games. But I don’t see poker falling by the wayside as other games become more popular. There is just nothing that will support that being the case.

BP: Has your research suggested U.S. online poker is complementary to live poker rooms?

KP: I’m fairly convinced that these two things are complementary…If you think about it kind of makes sense. It’s fairly different customer bases, and motivations, but they are similar games, so there is a link. They are activities that are done by different people and at different times. I think there is some loss in the overall gaming world, but it’s most likely going to come from offshore operators first.

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fake chips

Borgata cancels NJ poker match where fake chips were used; state probe ongoing

By WAYNE PARRY  Associated Press

ATLANTIC CITY, New Jersey — Saying they have confirmed that one or more people used “a significant number of counterfeit chips” at an Atlantic City poker tournament, state casino regulators on Saturday canceled the tainted match and ordered all prize money frozen until an investigation is complete.

The New Jersey Division of Gaming Enforcement canceled the first event of the Borgata Winter Poker Open. It had suspended the game Friday after suspicions about the use of fake chips arose.

No charges have been filed in the case.

“Thus far, investigators have found that one or more tournament entrants improperly introduced a significant number of counterfeit chips into the tournament, gaining an unfair advantage and compromising the integrity of play for the event,” Tom Ballance, the Borgata’s president and chief operating officer said Saturday.

“It is extremely unfortunate that the criminal actions of these individuals can have a detrimental impact on more than 4,000 other entrants,” he said. “We fully understand and regret the disappointment this cancellation causes our valued customers, and we will work diligently with DGE investigators to resolve the situation as quickly as possible. The integrity of our games and the confidence of our players is of the utmost importance to us.”

Ballance said the Borgata has thoroughly examined its remaining stock of chips, which were cleared by investigators for use in dozens of other events in the poker tournament, which will be played as scheduled.

It was not immediately clear what would happen with the entrance fees paid by people who participated in the tainted match. The Borgata said the state ordered “that all unpaid prize money be held in trust until more details and resolution can be determined.”

New Jersey State Police said Saturday the investigation is ongoing and that no arrests had been made.

The event under scrutiny is the tournament’s Big Stack, No Limit Hold ‘Em event. It began on Tuesday and had a $560 buy-in. There were 27 people remaining in the contest when play was suspended.

Joe Lupo, the casino’s senior vice president, said concerns arose during play Thursday night. The tournament was scheduled to resume at noon on Friday, but he said it was suspended before that could happen. He would not say what raised concerns about the integrity of the game, saying it was part of the ongoing investigation.

Customers wanting to participate in the tournament go to a registration area at the Borgata, pay the $560 entry fee, and go to a table, where they are given 20,000 chips to use in the poker games. By sneaking fake chips onto the table or otherwise introducing them into the game, a cheating player would benefit by having more chips than he or she had paid for, and is able to last longer in the game. The tables are watched by multiple security cameras, but casino and state officials would not discuss what, if any, evidence they have uncovered of cheating during the games.

The 18-day series of tournaments is a regular feature at the Borgata. The casino’s website said the championship event, which starts Sunday, Jan. 26., would include a $3 million prize guarantee.

The investigation does not involve Internet gambling, which began late last year and which the Borgata has dominated in the early going.

Wayne Parry can be reached at http://twitter.com/WayneParryAC

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dept of justice 12

Hartley Henderson

Should New Jersey Just Offer Sports Betting?

By Hartley Henderson – exclusive to OSGA.com             

The United States started the war on drugs over four decades ago and ever since then the DoJ has threatened both states and individual communities that indicated they were considering passing statutes that would violate those drug laws. Even when it came to soft drugs like cannabis and hashish the constant argument by the U.S. government was that soft drugs were just as dangerous as opiates and hallucinogens since they altered people’s minds and in their view they were gateway drugs that could lead to harder drug use. As a result, federal law still lists marijuana as a schedule 1 controlled substance and the courts have been relentless pursuing charges against both users and dealers of marijuana. Most legal minds suggested this war was a waste of time and that it was insane to continually charge people for a product that is no more harmful than alcohol or tobacco but it has always fallen on deaf ears with the exception of medical marijuana. As most know Colorado and Washington passed a referendum in the last election that aimed to legalize the production and use of recreational marijuana and it appears that the federal government has finally waved the white flag in this war. While acknowledging that the referendum in the two states violates federal law, the DoJ also indicated they weren’t interested in pursuing this fight. I spoke to Larry Walters, a first amendment lawyer that specializes in gambling and asked him for his opinion on that decision:

“The feds still have the power to enforce federal drug laws in the states that have legalized recreational marijuana. The Department of Justice has simply chosen not to enforce certain federal drug laws in those states, but has reserved the right to pursue serious drug traffickers anywhere in United States. This has become an issue of state/federal comity, and the DOJ has concluded that it is better for them to avoid a confrontation over recreational marijuana.”

The question that has to be raised, therefore, is whether the DoJ has finally conceded that it’s not worth their time to pursue social issues where there is no harm to anyone other than the individual. In particular, is the DoJ prepared to soften their stance on gambling? The answer appears to be yes and no.

Under the prior administration the DoJ was adamant that all wagering on the internet was interstate in nature and therefore violated federal law since it was impossible to ensure that bets would never be placed from out of the state. They pointed to the Wire Act and travel act and suggested that those two pieces of legislation were the only ones that counted and the Wire Act was intended to include all forms of betting and on any type of medium. As a result they were prepared to take on California, Nevada, New Jersey and any other states that indicated they would be pursing the implementation of online gambling. That changed in December 2011 when the DoJ issued an opinion that the Wire Act did not apply to casinos or poker and was only intended to include sports. This opened the door to online wagering and the DoJ never attempted to block any state from offering the product. Their only request was that state laws address issues related to underage and problem gambling and that states not allow criminals to run the websites. So internet wagering is now legal in Nevada, Delaware and New Jersey and it is expected that up to 15 other states will legalize internet wagering in the next five years. Moreover, there is a belief among most of the lawyers I spoke to that the DoJ will not try to block poker networks in the future which will allow people in different states to wager against each other where online poker is legal in both states.  In fact, the constitution may indeed demand that under the commerce clause.

” . . . the current government is acting as arbitrators for the sports leagues when they should be representing the wishes of the states and their citizens. . . . ” But the DoJ opinion still targets sports betting and one has to wonder why the government is still so vehement on holding the line with sports betting? PASPA was a questionable piece of legislation when it passed in 1992 and the DoJ at that time under Bill Clinton stated that in their opinion PASPA was not constitutional because it provided exemptions to four states, ignoring the potential desires of the other 46. Moreover, it was their opinion that gambling was an issue always left to the decision of the state and that the federal government had no business trying to pass a law that was clearly a state decision. PASPA was only introduced to appease the sports leagues (particularly the NCAA) who were concerned about their athletes betting on games. Clearly the leagues had no trust of their own athletes (which now seems pertinent in the light of steroid use and game fixing in the last decade) but it still begs the question as to why it’s the federal government’s duty to protect leagues from themselves. It would seem more logical to simply warn athletes that there are internal rules and if they violate the rules action will be taken, as Major League Baseball had done with Pete Rose. But a federal law was not only short sighted; it continued to drive sports betting underground which is the real cause for concern. As far as we know more illegal bookies have attempted to fix games and have broken legs of gamblers who could not pay than has ever happened with Las Vegas casino owners and managers. So the only logical conclusion is that when New Jersey passed a referendum to legalize sports betting (in the same election that Colorado and Washington passed a referendum to legalize recreational marijuana use), the DoJ should have simply said that this law is no longer in the public interest to pursue and allowed New Jersey to follow Nevada and offer sports betting. But of course that didn’t happen. The DoJ has weighed in and indicated that they would be challenging the law all the way to the Supreme Court if need be. Even when a justice in the Appeals Court issued a dissention arguing that the courts and DoJ were overstepping their bounds by trying to hold onto a law that was discriminatory and that should never have been passed in the first place, the objection fell on deaf ears. There’s no question that a major reason the DoJ is holding on so tight to their stance on sports betting is because the leagues have a huge lobby and want to keep betting on their sports illegal and for whatever reason the DoJ and courts seem to feel obligated to pander to the sports leagues. It’s also well known that the current Attorney General Eric Holder has strong ties to the NFL but is that really a reason to try and make sports betting the line in the sand where state’s rights do not supersede an inane federal law? James Cameron, an attorney that has prosecuted cases in federal courts and that was willing to give me his opinion certainly doesn’t think so:

“I’ve argued many cases over the years in the courts but I’ve never seen one as divisive as this. It seems obvious that the current government is acting as arbitrators for the sports leagues when they should be representing the wishes of the states and their citizens. Practically every colleague I’ve spoken to regarding PASPA agrees that it was a faulty law to begin with and why the government is holding onto this for dear life is unfathomable. They need to just accept that sports betting is not a capital offense and let the states make the decisions for themselves, as they have done (with the marijuana legislation) in Colorado.”

Lawrence Walters also suggests that New Jersey can argue that the government decision to fight for sports betting legislation while ignoring other federal laws is discriminatory:

“I’m sure that the lawyers representing New Jersey will make some legal arguments regarding recreational marijuana, and try to convince the court that the DOJ is acting arbitrarily by choosing which federal laws to enforce in particular states.”

So, what would happen if New Jersey just ignored PASPA and started offering sports betting at its casinos and racetracks and let the chips fall where they may? New Jersey was hoping that online gambling would save their dying gambling industry but the latest numbers suggest that was a pipe dream. In the first month online casinos and poker only generated $8 million in revenue (far below expectations) and overall gambling revenue in the state has declined. The racetracks and many of the casinos still believe that sports betting could be a game changer, however, since it is only offered in Nevada now. While tourists don’t seem willing to leave their own states to come to Atlantic City (likely because almost every state now has their own casinos), sports betting could provide a reason to actually visit the state. Around the Super Bowl and March Madness Las Vegas casinos are packed with gamblers and no doubt many of those same gamblers from New York, Pennsylvania, Virginia etc. who make the trek to Vegas would be only too happy to drive to Atlantic City instead. And a large number of bettors who currently wager online or with underground bookmakers would wager at New Jersey casinos and racetracks instead since they know there money is safer and easier to fund than the other options. In fact Chris Christie even acknowledged such and indicated immediately with great fortitude that he would be introducing sports betting once the referendum passed to help casinos and racetracks in the state, an attitude which was completely different than his demeanor when the legislators voted to legalize online gambling in which he first vetoed the bill and later only accepted it grudgingly. So perhaps Christie should do as Colorado and Washington legislators have done and say that they will be offering sports betting in New Jersey and dare the feds and sports leagues to stop them. What can the Supreme Court really do? If they make great hay about it then they will have to not only defend PASPA on its merits (which will be difficult) but they will have to indicate why it’s ok to ignore one set of federal laws relating to vice (drugs) while defending another. And how much money is the DoJ really willing to throw into this fight? The sports leagues no doubt will scream from the rafters and may even suggest they will punish New Jersey by taking away teams from them but will the NFL really withdraw the New York Giants and New York Jets to make a point? The NBA already moved the Nets to Brooklyn and no one cares if the NHL withdraws the Devils. And as for punishing New Jersey collegiate athletes that will never happen. The NCAA already threatened to take away a nothing women’s athletic tournament and New Jersey residents reacted with a yawn. At the end of the day Christie and New Jersey legislators have to decide if it’s more important to help their dying industries with the introduction of sports betting or whether it’s more critical not to tick off the sports leagues.

The decision of Colorado and Washington has indeed opened up the opportunity for New Jersey to move forward with sports betting and “damn the torpedoes”. If it’s ok for one state to violate a federal law related to vice then it should be ok for another state to do the same. Christie will be leery of simply violating federal law since he has presidential aspirations, but he may actually win more votes in the electorate by defending state’s rights than he would by kowtowing to the sports leagues. Let’s hope Christie makes the necessary decision for New Jersey and the state once again becomes the preeminent place for people to go to gamble.

Contact Hartley via email at hartley[at]osga[dot]com.

Read insights from Hartley Henderson every week here at OSGA and check out Hartley’s RUMOR MILL!

 

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