July 12, 2011

California Internet Gaming Bills Face Senate Committee

Opposing online poker bills face the Senate Government Organization Committee on July 12, reported Capitol Weekly. The hearing is informational, and neither bill is expected to come up for vote.

California State Senator Lou Correa (D-Santa Ana) has amended his online poker bill, Senate Bill 40, to create opportunity for more types of companies to offer online poker and more harshly penalizing those who play on or organize illegal gaming operations including via online and mobile telecommunications.

Tacked onto the $10,000 fine, violators would face “seizure and forfeiture of all personal and real property used in or derived from the operation of or play on an unauthorized website.”

Changes to the more “consumer friendly” bill are intended to help generate $250 million in new revenue for California through upfront payments from online poker operators, states Correa’s press release. If approved, the bill would enforce a $5 million, non-refundable application fee that would count against later payouts to the state. The state gets 10 percent of the take. The fee is intended to disuade less serious companies from entering the online gaming marketplace. “But entities that apply for a license within 90 days of the bill going into effect would prepay $50 million to the state against their future revenues, while those applying after have to pay $250 million,” Capitol Weekly explains.

The California Online Poker Association (COPA), led by the Morongo Band of Mission Indians, supports the changes to S.B. 40, and the California Tribal Business Association (CTBA), an alliance of three tribes, opposes both S.B. 40 and another bill, S.B. 45, introduced by California State Sen. Rod Wright (D-Inglewood) in December.

COPA has a coalition of around 30 tribes and 15 card rooms, and an advocacy website—AllinforCalifornia.org—to lobby on behalf of S.B. 40. COPA has previously said S.B. 40 will give California a much-needed infusion of more than a thousand jobs and $1 billion in revenue without raising taxes.

“The entire set of amendments reflects a greater chance for California to earn more income,” COPA spokesman Ryan Hightower told Capitol Weekly.

S.B. 45 hasn’t changed or moved since December. It allows tribes, card rooms and most anyone, including Nevada casinos and offshore firms, to compete for a California license. It would also allow gaming other than poker.

Hightower told Capitol Weekly that he expects S.B. 40 to make headway in the near future. “I think within the next 75 days we’re going to see some movement on the bill, and it’s still in a very good position to pass this year,” he said.

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September 22, 2011

U.S. Alleges Full Tilt Poker Defrauded Players

On September 20, the U.S. Justice Department accused poker stars Howard Lederer and Christopher Ferguson, directors of the website Full Tilt Poker, of defrauding poker players out of $300 million, reported the Wall Street Journal.

A civil complaint in April had accused the site of bringing in $444 million for poker celebrities, including Lederer and Ferguson. The U.S. Attorney in the Southern District of New York on Tuesday filed a motion to amend the civil complaint to allege that Lederer and Ferguson, and two other Full Tilt Poker directors, what the the Justice Department has called a Ponzi scheme.

Full Tilt executives allegedly misrepresented to the website’s players that the money the company held in player accounts was safely held. It was actually being used for other purposes—to pay out $444 million to themselves and other owners, accused the US. Justice Department.

“Full Tilt was not a legitimate poker company, but a global Ponzi scheme,” said Preet Bharara, U.S. Attorney for the Southern District, in a statement.

The attorney for Full Tilt Poker today defended the executives behind the poker site. “While the government has obviously taken issue with the underlying activities of FTP, under any reasonable interpretation, the world-wide operations of the online cardroom are not a so-called Ponzi scheme,” Full Tilt Poker attorney Ian Imrich told The Wall Street Journal in the article Full Tilt Fires Back at the U.S.

The issues at Full Tilt result from a problematic bank, not an investment scheme intended to defraud players, said Jeff Ifrah, an attorney representing the company and personal attorney of Chief Executive Raymond Bitar. “A Ponzi scheme requires an investment vehicle in order to receive a certain rate of high return,” Mr. Ifrah told the Journal. “None of those things happened here.” Instead, he said, “maybe it was mismanaged.”

Charges against online poker sites may affect the chances of legalizing online gaming in the United States. Tribal led organizations like the California Online Poker Association (COPA), a coalition of California tribes and card rooms led by the Morongo Band of Mission Indians, have long advocated legalizing online poker in California.

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November 23, 2011

A Seat at the Internet Gaming Table

Indian gaming experts say there’s no need to amend the Indian Gaming Regulatory Act in order to give the National Indian Gaming Commission a regulatory role in any Internet gaming enterprises established by tribal governments.

The 1988 Indian Gaming Regulatory Act (IGRA) established the commission as the regulator of Indian gaming along with tribal governments. Since then there have been various threats to reopen IGRA for amendments – threats that tribal leaders have vigorously opposed for fear that opening the gaming statute would provide an opportunity for anti-gaming legislators to introduce amendments to limit Indian tribal governments’ ability to conduct gaming. But with the prospect of Internet gaming on the horizon, tribal leaders are pushing for a regulatory role for the commission and some leaders and legislators have questioned whether it would be necessary to open amend IGRA in order to authorize the commission as the oversight agency.

Spokesmen for the commission and for the National Indian Gaming Association (NIGA) say authorizing the commission to provide oversight to Indian gaming in cyberspace could be written into Internet gaming legislation. “I believe that responsibility is there with the commission. I don’t see why we would have to open up IGRA in order to do that.” NIGA Chairman Ernie Stevens Jr. says. “What we’re saying is that the commission has the experience and knowledge about Indian gaming and they’re the only ones who really have that kind of experience, and we think that would be more appropriate than having an outside agency oversee it.”

The issue of opening IGRA was raised in front of the Senate Committee on Indian Affairs at an “Oversight Hearing on the Future of Internet Gaming: What’s at Stake for Tribes?” November 17 when Sen. Al Franken (D-Minn.) questioned Larry Roberts, a citizen of the Oneida Nation of Wisconsin and general consul for the National Indian Gaming Commission. “If Internet gaming were made fully legal tomorrow and your commission would have a role in regulating tribal Internet gaming, do you think the IGRA would have to be rewritten in any way in order for the commission to take on that role?” Franken asked.

Roberts said it was a hard question to answer “in the abstract, because there’s no bill out there that provides roles and responsibilities for us so it’s hard to lay out whether it would actually have to be part of IGRA or not. It really depends on how Congress defines our role.”

Franken probed further. “But, I mean, if Congress were to say, ‘Okay, the Indian side of this is going to be regulated by IGRA,’ it would have to be in the legislation, obviously, right?” Franken said, referring to the legislation to legalize Internet gaming.

“Yes,” Roberts said, “and as with any legislation we would implement our statutory duties as Congress directs us to.”

Protecting IGRA from amendments is among a set of principles tribal leaders developed over the past two years, facilitated by NIGA. The principles establish ground rules for an Internet gaming bill that would meet tribal government interests and provide an even playing field between tribal and commercial gaming. They were developed in response to current Internet gaming proposals that Indian country leaders say give unfair advantages to commercial gaming in states such as Nevada and Arizona. The principles provide for protection for tribal sovereignty; give tribes the right to operate, regulate, tax and license Internet gaming; allow tribes to reach customers off the reservation; exclude tribes from taxes; protect existing tribal-state compacts, and provide economic benefits for Indian country.

The push to legalize Internet gaming is coming from the commercial side of the industry, primarily from the Poker Players Alliance, the American Gaming Association, and the gaming states of Nevada and New Jersey. Sen. Harry Reid (D-Nevada) tried to attach Internet gaming language to an Omnibus bill late last year, and Congressmen Joe Barton (R-Texas) and Congressman Jim McDermott (D-Wa.) have proposed H.R. 2366 and H.R. 2230, respectively. The existing proposals name the Department of Commerce and the Department of the Treasury as regulators of commercial Internet gaming.

Jason Giles, NIGA’s executive director and former general consul, argues that legislation to legalize Internet gaming could simply name the commission as the regulator of Indian Internet gaming. “You don’t need to go back into the legislation that created the Commerce and Treasury departments and amend those in order to give them a new role or responsibility,” he says.

While some tribes are eager for Internet gaming to get off the ground and others oppose all Internet gaming, tribal leaders agree—and insist—that they should have a major role in shaping any legislative proposals. Akaka strongly supports the tribal leaders’ involvement in the process. He noted that Indian gaming comprises approximately 43 percent of the entire $61 billion-plus gaming industry in the U.S. “That is why it is critical that the committee explore this issue to find out what it would mean for tribes and their traditional Indian gaming facilities,” Akaka says. “We must make sure that the unique circumstances surrounding tribal sovereignty are maintained in any legislation and we must also enable tribes to fully participate so tribes are on equal footing with their counterparts in the commercial gaming industry should any legislation be considered.”

Several legislators also support the nation’s efforts to be at the table and to protect tribal sovereignty. Sen. Daniel K. Inouye (D-Hawaii) wrote to Reid in October urging that tribes be treated fairly in any legislation the Senate majority leader might consider. “Tribes are sovereign governments and should be treated as such,” Inouye wrote. “They should have the authority to regulate, tax and operate gaming. . .  When Congress enacted IGRA in 1988, we intended to authorize Indian tribes engaged in gaming to use new technologies as they developed. Accordingly, Internet gaming has become a new market and tribes should have equal access to this market.”

John Hoeven (D- N.D.) wrote to Reid on November 14 in support of Inouye’s letter. He also argued for fair treatment of the tribes. “Historically, our country has recognized the importance of allowing tribal leaders to regulate this industry in a way that will meet the goals of promoting tribal economic development, tribal self-sufficiency, and a strong tribal government as outlined in IGRA. Congress should continue to respect tribal nations and their economies by treating them fairly during any Internet gaming discussions,” Hoeven wrote.

In October, Congressman Tom Cole (D-Okla.) wrote to the co-chairs of the Joint Select Committee on Deficit Reduction—the “Super Committee” that ended it’s work November 21 without reaching consensus on deficit reductions—urging the committee not to include Internet gaming provisions in the deficit reduction package. “While I do not support Internet gaming, if an Internet gaming regime is established, anything short of a comprehensive system developed through the regular committee process threatens the constitutionally recognized sovereignty of Indian tribes,” Cole wrote.

The current bills are clearly inadequate, Stevens says. “As they rolled this out they did it without respect for several aspects that are standard for tribal governments. We have to be treated as tribal governments. They have to understand and respect that we have a responsibility to our communities as we move forward because we’re not individuals, we’re not private investors. Our tribal governments’ economic development needs are in order to service our communities.”

Akaka has promised to analyze all potential impacts of Internet gaming on tribal nations. “I know there are many other tribes and affected stakeholders that we need to hear from as well. That’s why I intend to convene additional meetings about this issue so my colleagues and I can make sure we’re hearing from all interested parties representing tribal issues in this important matter,” he says. No further hearings have been scheduled.

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February 28, 2012

California Senators Introduce Online Poker Bill

On February 24, California Sen. Darrell Steinberg (D-Sacramento) and Sen. Roderick Wright (D-Inglewood) introduced a bill to allow intrastate online gambling, reported PokerNews.com. Despite previous failed attempts to get approval for online poker in California, the Department of Justice’s recently updated opinion on online gaming may increase the bill’s likelihood of success.

If passed, the Internet Gambling Consumer Protection and Public-Private Partnership Act of 2012, also known as SB 1463, would only allow poker for the first two years of regulation, reported OnlinePokerNews.org. Eligible operators could apply for a 10-year license. Those approved would pay a mandatory $30 million licensing fee, credited against gross gaming revenue proceeds for the first three years of operation.

The department would potentially phase in other games allowed under the California Constitution and the Penal Code after the first two years.

The move is an effort to pump more money—prospectively $200 million in the fiscal year 2012-2013—into state coffers for public services that have suffered as a result of California’s budget crisis.

Nevada has already legalized intrastate online poker, and the neighboring state is close to licensing it.

But California Governor Jerry Brown is skeptical online gaming could boost the state’s ailing economy, reported OnlinePokerNews.org.

Also hindering the bill’s passage: the California tribal casino community remains divided on Internet gaming. California tribes funnel hundreds of millions of dollars to the state annually, in addition to making significant donations to lobbyists, thus potentially thwarting politicians’ motives to move forward with online gaming.

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April 2, 2012

NIGA Workshops Will Focus on Internet Gaming

Every year, the National Indian Gaming Association (NIGA) provides workshops at its convention to help attendees improve their respective gaming operations. These workshops offer discussion and interaction on some of the current topics that affect the industry as a whole. At this year’s gathering, which takes place April 1 to 4 in San Diego, attendees will, as usual, have a wide variety of workshops from which to choose.

“NIGA will host 144 hours of critically selected workshops,” Michael Woestehoff, Diné, Media & Communications Director for NIGA wrote in an e-mail to Indian Country Today Media Network. “The purpose of the workshops is to assure quality educational opportunities on Indian gaming and professional development.”

Of particular interest this year is the burgeoning field of Internet gaming. Two of the workshops devoted to this topic are “Preparing Tribal Regulators for Online Gaming—Certification” and “Internet Gaming on Indian Lands.” The former, which will be held on Monday, April 2 from 2:15 to 4:30 p.m., gives tribal gaming leaders some of the latest information to prepare for the arrival of Internet gaming. The latter will be held Tuesday, April 3 from 3 to 4 p.m. and will further explore some of the themes taken up in the Monday session. Specifically, there will be a focus on the important memorandum issued by the Justice Department regarding the application of the Wire Act to online gaming.

This year’s convention will have plenty to offer its attendees. But if Internet gaming is of special interest to you—and it almost certainly should be—then these are the workshops in which to participate.

Meanwhile, as hundreds take part in the workshops or browse the many booths, hundreds of others will be working on gaining certification during NIGA’s Commissioner Certification Level 1 training sessions. The three-level training is recognized as a standard in the Indian gaming industry; more than 1,500 have attended the course, which was created by regulators with years of hands-on experience in the industry. Sessions will be held on April 2 and 3 from 9 a.m. to 4 p.m.

“In its 13th year, this series is recognized as a standard in Indian gaming,” Woestehoff said. “One of the certification series is ‘Background Investigations and Licensing,’ where NIGA’s own certified trainers will arm commissioners with much information to help make critical business decisions in regard to new responsibilities to employees and vendors.”

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