U.S. Gambling Comes in at $2.6 Billion; Poker Pros Get ‘Right’ to Play; Bitcoins Surface in Fed Raid; Christie Optimistic

gamblersAmericans Spent $2.6 Billion On I-Gambling In 2012

Nation Represents Around 10 Percent Of Global Market Right Now

by Brian Pempus

Despite online poker’s Black Friday in 2011, the American online betting market was $2.6 billion in 2012, the American Gaming Association said Tuesday.

The research was conducted by British-based research firm H2 Gambling Capital.

Globally, around $33 billion was spent by online gambling customers in 2012. There have been estimates of the American market being worth around three times as much if fully open for business. The U.S. (population 314 million) is after all the world’s top economy.

The Tuesday news came as the AGA, the casino industry’s lobbying group on Capitol Hill, prepares to use the fictional film Runner, Runner as a way to stress the need for federal legislation on web gambling. The film depicts the alleged shadiness of offshore operators.

“Americans account for nearly 10 percent of the global online gaming marketplace at a time when the business is illegal in all but three American states [Nevada, New Jersey and Delaware],” Geoff Freeman, the president and CEO of the AGA, said in a statement. “It is past time for policymakers to put necessary safeguards in place.”

“The alternative to the approach AGA recommends is a state-by-state patchwork of regulations across a borderless Internet where the black market will continue to thrive in states that choose not to pass legislation,” he warned in the press release.

While the AGA will continue hammering home the message that online poker should be legalized nationwide in order to make it a cleaner business, Freeman has admitted that the odds of anything coming to fruition are really slim, according to the Las Vegas Review-Journal.

Freeman’s opinion echoes the view of former Nevada Gaming Control Board Chairman Mark Lipparelli, who told Card Player recently that “the window is essentially closed.”

The opinion that a federal bill is very unlikely isn’t anything new, however. Some industry folks have been saying for a long time that they are pessimistic about its chances. Many lawmakers, for whatever reason, are simply opposed to the idea of such betting being available across the nation on any computer with an Internet connection. They cannot be persuaded.

Despite the pessimism, the casino lobby has been tasked with still making the effort. Obviously, it would still be preferable for casino firms to have access to the gambling-aged population in one fell swoop rather than the arduous process of authorization state by state.

While online gambling in the form of slot play might not depend too heavily on liquidity to function properly, online poker is one product that thrives on large player pools. For example, the larger an online poker tournament becomes the more players it attracts and if there are more cash games to choose from players generally feel more comfortable and happy.


poker proPoker Professionals Keep Playing – With Court Approval – Despite Legal Issues
By Earl Burton 

When a person commits a violation of the law, there are some changes that naturally come with the territory. One of those things that do not change is that the person continues on with their employment, usually making special arrangements to continue to work. What happens when your job is “international poker professional,” though?

In the courts of New York, recent decisions in cases that involve notable poker players have resulted in those players being able to leave the Empire State – usually while out on bail. The October 2012 arrest of poker pro Amnon Filippi saw the player restricted in his travels. Filippi surrendered his passport to authorities and was even fitted with a monitoring bracelet that kept him in the New York City area. After meetings in court since that time, Filippi has been able to travel the United States with the blessing of the courts.

The same situation has occurred in the massive case by the U. S. Attorney’s Office in the Southern District of New York in their April indictments against several top poker pros. Abe Mosseri, who was one of the players charged in the case allegedly involving Russian organized crime figures and money laundering, was able to get a hearing this past May to allow for him to travel to Las Vegas for the World Series of Poker (Filippi had a similar case that allowed him to do the same). “This is not Mr. Mosseri’s desire to get some hot weather in Vegas,” his attorney, Michael Bachner, stated at the time.

Another figure allegedly involved in the Russian case, Justin ‘BoostedJ’ Smith, has already pled guilty to lesser charges and paid a $500,000 fine. He does have jail time potentially facing him come January 2014, but he is also being allowed to continue to travel the poker circuit until his actual sentencing at that time.

So why are these gentlemen being allowed to travel to Las Vegas, California and other poker hotspots? It is because it is their job to play poker for a living and, if the courts didn’t make allowances for them to pursue their livelihoods, it would be a potential issue if any of the cases come under review.

“(Mr. Mosseri) just wants to engage in his livelihood,” Bachner stated during Mosseri’s hearing before the WSOP. “(Poker) is a legal activity that he has done for many, many years.” Smith’s attorney, Mark MacDougall, used much the same reasoning in negotiating Smith’s continued play on the circuit, saying to U. S. District Judge Jesse Furman during Smith’s plea deal earlier this month, “(Mr. Smith) make a living by lawful poker playing and poker tournaments and supports members of his family that way.”

The decision by judges to allow the players to continue their livelihood isn’t surprising, according to I. Nelson Rose, one of the foremost authorities on gaming law and a professor at the Whittier Law School. Some of the charges the people face, Rose believes, only apply to certain forms of gaming such as sports betting. “There’s not a federal law that says someone can’t play poker,” Rose continues and, as such, the courts are correct in allowing the players to continue to ply their trade.

In the case of those charged in the Russian case, Rose believes that everyone is in agreement that they will abide by the laws and return to court when their cases are set to be heard. In Filippi’s case, he has been able to not only travel to Las Vegas but also Atlantic City and Los Angeles. Each time he has left the New York area, Filippi has returned and hasn’t missed any appointments or “check ins” that he had to agree to in being allowed to continue to follow his profession.

While these men are facing some serious charges, the courts are correct in allowing them to continue to do their job, even if that means heading to a casino to play a game that some take part in as recreation.

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bitcoins 13Drug Marketplace Using Bitcoins Raided By Feds

Value Of Digital Currency Drops After Bust Of Silk Road
by Brian Pempus

Reuters reported that the Bitcoin price took a dive Wednesday after federal authorities cracked down on Silk Road, an online marketplace allegedly used to buy and sell illicit drugs. The site’s owner, Ross William Ulbricht, was arrested in San Francisco on Tuesday.

Silk Road allegedly was a place to post ads for illegal products, sold for Bitcoins. The products were then mailed to the buyer. The marketplace facilitated sales of more than 9.5 million Bitcoins, which is about $1.2 billion. There are about 11.8 million Bitcoins in circulation.

The market is said to one day cap out at 21 million.

As a Card Player feature on Bitcoins described, “Bitcoins were developed in 2009 by an anonymous developer known only as Satoshi Nakamoto as a peer-to-peer, decentralized digital currency. Because banks and other payment processors are circumvented in Bitcoin transactions, the processing fees are almost zero. Additionally, they can be anonymously used all over the world without the need of a daily conversion rate.”

The very nature of Bitcoins has attracted gamblers as well, and the raid this week could have ramifications for some online poker players who use sites dealing in Bitcoins.

In the post-Black Friday world, some poker sites turned to Bitcoin.

WinPoker, a member of the iPoker network, began accepting such deposits in March. Switch Poker has been offering Bitcoin options since November of 2011. SealsWithClubs chose to deal exclusively with Bitcoins.


chris christie funnyHartley Henderson
Chris Christie may have Reason for Optimism on New Jersey Sports Betting
By Hartley Henderson – exclusive to OSGA.com

Despite losing its appeal of PASPA in the 3rd circuit federal panel last week, New Jersey Governor Chris Christie remains optimistic that the U.S. Supreme Court will take up the case and possibly overturn it. Christie noted that several other states are watching how the New Jersey issue is handled as a state’s right issue and he also noted that one of the justices on the appeals panel (Justice Vanaskie) not only disagreed with the other two judges but in fact issued a clear reason for dissent. Without going into great detail on his opinion, Justice Vanaskie essentially said that in the past Congress gave decision in the area of gambling to the states and that PASPA precludes the states from actually doing so. In his opinion, if a state wants to offer sports betting then it’s not for the Federal government to decide that for them. Perhaps the most telling comment came in this passage from his written dissent:

“When New Jersey fails to authorize or license sports gambling, its citizens will understandably blame state officials even though state regulation of gambling has become a puppet of the federal government, whose strings are in reality pulled (or cut) by PASPA. States can authorize and regulate some forms of gambling, e.g., lotteries and casinos, but not other forms of gambling to implement policy choices made by Congress. Thus, accountability concerns arising from PASPA’s restraint on state regulation also counsel in favor of concluding that it violates principles of federalism.”

For an appeals court justice to disagree with the other two justices so vehemently is rare and could give a valid reason for the Supreme Court to at least consider the case. It should be noted that the other two justices that voted to uphold PASPA said they didn’t necessarily agree with the notion behind the law but it wasn’t their mandate to judge on its fairness, only to judge if it’s constitutional. And in their opinion, the constitution allows the federal government to discriminate in this manner and they didn’t feel it was their right to overturn constitutional laws passed by Congress. The judges however noted that there have been other instances when the Supreme Court has overturned a federal statute, thereby giving more reason to suspect that the highest court will hear the case.

Christie’s reasons for pushing for sports betting in New Jersey are fairly clear. Not only does he view it as unfair that 4 states, including neighboring Delaware are able to offer a sports betting product to the exclusion of the other 46 states but he also campaigned for and won a referendum in the state on the issue of sports betting. Almost 2/3 of New Jersey voters indicated that they wanted sports betting as a means to prop up the race tracks and casinos in the state, so to ignore the desires of the citizens is unfair and undemocratic. Moreover, the New Jersey horse racing industry is relying on sports betting as a possible savior to its product and if the state isn’t able to offer it, they could see many layoffs or even track closures.

” the public becomes more accepting of gaming, they may expect a ‘loosening up’ by the courts . . . ”
As for the leagues’ reasons for not wanting PASPA to be heard by the Supreme Court, that is clear also. As long as the courts rule strictly on the constitutionality of PASPA, the law will almost certainly stand. But if the courts rule on the merits of the law, the leagues could be in trouble. Not only would the courts have to provide a reason why it’s fair to discriminate against states that clearly voted in favor of a product via a referendum, but they also have to justify why a law that the DoJ said should never have been passed because it’s likely unconstitutional was allowed to pass in the first place. And if the courts ask the leagues why they believe the law is necessary they may have to explain why they distrust their product and players so much that they need a law to ensure that the players won’t be tempted to cheat. Moreover, they’ll have to explain why it’s better for sports betting to remain underground with unsavory characters and bettors like Tim Donaghy who wager illegally than with a legal and regulated sportsbook. And lastly, they may have to explain why the NHL, that agreed to form a memorandum of understanding with Betfair to identify suspicious wagering, feels it’s still better to keep the product underground than to work with legal sportsbooks who can indeed help them clean up any cheating in the games.

The question that has to be answered though is whether Christie’s optimism is warranted or not? I spoke to Larry Walters, a well known attorney in the gambling field and asked him some questions about the next steps and whether the Supreme Court would actually hear the case and consider overturning PASPA.

The first question I asked Walters was whether the Supreme Court was indeed the next step in the process or whether it has to go through other channels first and also if it would be the end of the line for PASPA challenges if the Supreme Court refuses to hear it.

“I had to check the docket but now I can confirm that no motion for reconsideration/rehearing/clarification has been filed, thus the Supreme Court of the United States would be the next step. If the Supreme Court refuses to hear the case, that would likely put an end to any other state’s successful effort to legalize sports betting (other than those which were grandfathered). States in other circuits could try, but the Third Circuit decision would be influential (however not binding).”

Next I asked Walters whether he believed the Supreme Court would indeed hear the case or not.

“The chances that the Supreme Court will take jurisdiction, (i.e., ‘grant certiorari’), in any case is about 1 in 100. However, the odds are better here, since substantial issues involving state sovereignty, federalism and the 10th Amendment are at stake. The Third Circuit’s opinion included a strong dissent, which recognized the constitutional concerns associated with forcing New Jersey to accept federal sports-wagering policy, against the clear mandate of its citizens. However, the Supremacy Clause, relied upon by the majority opinion to uphold PASPA, and preclude sports betting in New Jersey, does provide some constitutional basis for treating federal statutes as superior to conflicting state (statutes). Important to any Supreme Court appeal will be the Justices’ interest in clarifying the status of states’ rights; particularly in the era of Obama Care implementation, and the immigration controversy, which has raised these 10th Amendment issues to the forefront.

Constitutional issues aside, there are important gambling undertones to the decisions being made in this litigation. The American public does seem to be more accepting of gaming and gambling in general, with electronic games awarding ‘virtual’ prizes becoming commonplace on most mobile devices. The venues for real money gambling are also becoming more prevalent, with online lottery tickets, state-sanctioned online gambling, and Indian casinos. Gambling alternatives like sweepstakes, skill gaming and penny auctions are rising in popularity at the same time. So as the public becomes more accepting of gaming, they may expect a ‘loosening up’ by the courts on the sports betting restrictions. However, courts are not driven by polls or pop culture. The Supreme Court will base its decision, if it accepts the case, on complex notions of federalism, comity, and the fundamental structure of our political system. If the case is accepted, it could result in sports betting in New Jersey, but the underlying legal principles it would be forced to address, could be far-reaching and highly precedential in nature.”

I spoke to other lawyers whose expertise was not necessarily gambling but that have dealt with issues that were appealed all the way to the Supreme Court and one lawyer tended to agree with Walters that this is a case that will likely be heard by the highest court in the land:

“State lawyers are watching this case closely because it’s a clear state vs. federal government issue and they want to hear from the court’s own mouth that the states do not have power over their own decisions in an area that has clearly been designated to the states by Congress. It’s hard to fathom that the courts will not at least want to look at the constitutionality of the law and see if there is a possible reason to reverse the old law. After all are the NCAA and NFL more influential and powerful than a state passed referendum?”

Lawyers also concurred that the Supreme Court is far less right wing than it has been in the past and hence have been more open to accepting these types of cases than it was under prior presidents.

So does Christie indeed have a reason to be optimistic regarding sports betting? Perhaps he does and all anyone ever asked for is for the Supreme Court to objectively look at PASPA and decide on its merits. If they do so, there’s good reason to believe that the law is clearly discriminatory, opposes the 10th amendment and probably should never have even been passed in the first place.
Contact Hartley via email at hartley@osga.com.

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