Some Thoughts on the Ban and industry response

[mary]

"percentage game" does not refer to poker in the California legal code. It refers to Pan Nine and Pai Gow, which are games in which the Banker position rotates.

I think poker "rake" in California is charged as a fee. At any rate, it's addressed here that any compensation for an unlicensed game is illegal:

Penal Code Sec. 337j

(a) It is unlawful for any person, as owner, lessee, or employee, whether for hire or not, either solely or in conjunction with others, to do any of the following without having first procured and thereafter maintained in effect all federal, state, and local licenses required by law:
(1) To deal, operate, carry on, conduct, maintain, or expose for play in this state any controlled game.
(2) To receive, directly or indirectly, any compensation or reward or any percentage or share of the revenue, for keeping, running, or carrying on any controlled game.
(3) To manufacture, distribute, or repair any gambling equipment within the boundaries of this state, or to receive, directly or indirectly, any compensation or reward for the manufacture, distribution, or repair of any gambling equipment within the boundaries of this state.

(b) It is unlawful for any person to knowingly permit any controlled game to be conducted, operated, dealt, or carried on in any house or building or other premises that he or she owns or leases, in whole or in part, if that activity is undertaken by a person who is not licensed as required by state law, or by an employee of that person.
(c) It is unlawful for any person to knowingly permit any gambling equipment to be manufactured, stored, or repaired in any house or building or other premises that the person owns or leases, in whole or in part, if that activity is undertaken by a person who is not licensed as required by state law, or by an employee of that person.

(d) Any person who violates, attempts to violate, or conspires to violate this section shall be punished by imprisonment in a county jail for not more than one year, or by a fine of not more than five thousand dollars ($5,000), or by both that imprisonment and fine.

(e) (1) As used in this section, "controlled game" means any game of chance, including any gambling device, played for currency, check, credit, or any other thing of value that is not prohibited and made unlawful by statute or local ordinance.

2) As used in this section, "controlled game" does not include any of the following:
(A) The game of bingo conducted pursuant to Section 326.5.
(B) Parimutuel racing on horse races regulated by the California Horse Racing Board.
(C) Any lottery game conducted by the California State Lottery.
(D) Games played with cards in private homes or residences, in which no person makes money for operating the game, except as a player.

(f) This subdivision is intended to be dispositive of the law relating to the collection of player fees in gambling establishments.

No fee may be calculated as a fraction or percentage of wagers made or winnings earned. Fees charged for all wagers shall be determined prior to the start of play of any hand or round. The actual collection of the fee may occur before or after the start of play.
Ample notice shall be provided to the patrons of gambling establishments relating to the assessment of fees. Flat fees on each wager may be assessed at different collection rates, but no more than three collection rates may be established per table.

[mary]

Try finding a land-based casino with $1 minimum bet limit.

$1 games in Washington State. Better BJ rules than lots of places in Vegas.

In land casinos, Poker and BlackJack are the best games for players, but they don't compete with online casinos with respect to speed of play, which is very important if you have an edge through skill and study.

[mary]

Corporations that borrowed money from banks for acquisitions or to go public so that the founders could cash out (think Party) are now under pressure from their lenders to shut down. This is one of the reasons why I recommend CRYP (which I do own) because they did not borrow money and had started their move away from the US years ago.

Sportingbet faces £300m loss in retreat from US
Simon Bowers
Saturday October 14, 2006

Guardian

Online gambling group Sportingbet is expected to make losses of more than £300m in the current financial year after it is forced to write off a string of now almost worthless US acquisitions following a clampdown on unlicensed internet betting by American legislators.
The London-listed group yesterday announced it had sold Sportsbook.com, the largest online bookmaker in the world, for just $1 (54p) to an unnamed private consortium only hours before President Bush signed into law a draconian anti-gambling act. The division's management team will also acquire a stake.

Sportingbet's Paradise Poker business, the third largest poker site in the US, yesterday closed to US customers with immediate effect - wiping out about two-thirds of divisional revenues at a stroke.

Meanwhile, the market leader in US online poker, PartyGaming - until this week a FTSE 100 company - last night issued a statement confirming that its websites had been closed to US customers. Fellow London-listed Empire Online made a similar announcement.

The prohibitionist Republican legislation, rushed through by senate majority leader Bill Frist as part of the Safe Port Act, is designed to target banks and payment services that facilitate online wagering. Its arrival has prompted an exodus from the US, with many London-listed firms joining the stampede.

Like PartyGaming and Sportingbet, London-listed 888 has declared its intention quit the US. Some industry insiders were last night speculating that these firms' customer databases - still valuable to those intending to ignore the act - could reach the black market.

The much smaller World Gaming, the company that hosts Sportingbet's US-facing websites, yesterday became the first company to collapse in the wake of the legislation. It called in administrators as the management team stepped down.

The company took on £23m of debt when it acquired US-facing online bookmaker Sportsbetting last October. Its main creditor is understood to be Barclays, which has extensive interests in the US. On Thursday the British bank said: "We are contacting our customers to ensure they will conduct their operations in full compliance with the legislation."

Royal Bank of Scotland is also believed to be putting pressure on its clients to comply with the act. RBS services all player accounts at Israeli-owned PokerStars, the US's second largest online poker operator. PokerStars, which had been hoping for a London float valuing the business at £1.6bn, is among the few operators to declare that it will carry on operating in the US regardless of the Safe Port Act. RBS may ditch the company as a result.

Meanwhile, Sportingbet's accounts indicate a goodwill value of £386m - well above the firm's market capitalisation of £245m. Some £224m of the goodwill relates to the acquisition of Paradise Poker two years ago, with the remainder mainly comprising goodwill from Sportsbook, acquired in 2002.

Sportingbet shares last night closed down 6.5p, or 10%, at 58.5p - their lowest level since January 2004. Earlier in the year the company had been valued at £2bn. In a statement chief executive designate Andy McIver said: "We are saddened to have to dispose of such a fantastic business as a result of political actions in the US congress."

Backstory

PartyGaming closed, with immediate effect, to US business. Empire Online issued a similar statement. Others, such as 888, had already indicated their intention to quit the US. Sportingbet sold its US bookmaker Sportsbook for $1, saving the group from $13m in related liabilities and a potential $14m bill to wind down the business. It has closed its Paradise Poker website to US customers. Shares in Leisure & Gaming are suspended as it too seeks to sell its US business. Private group PokerStars, controlled by Scheinberg family, is to continue trading in the US, as is Bodog. Gambling payment specialist Fireone has put a bar on American business, though rival Neteller has yet to make its position clear.

Guardian Unlimited © Guardian Newspapers Limited 2006

[dominique]

Hello Mary,

Thank you for those very useful posts. Good to see you back!

[Simmo!]

...unnamed private consortium...

hmmm

[mary]

Yeah, unless they grandfathered in all the previous shareholders pro rata into the "private consortium", they may have actually pulled quite the scam on their shareholders.

The argument could made that the spunoff business would be worth more and they didn't shop it around but made a sweetheart deal to unknown buyers.

I haven't read the details: even if they take the loss for tax purposes, it wouldn't get them square with creditors. If it's a way to shed the creditors, it doesn't invite the public shareholders along with the deal (unless, as I pointed out before, they did set it up that way.)

This sort of weirdness goes on all the time in the land industry. Donald Trump is notorious for coming out better than his shareholders.

[wolfman]

Looks like the US is getting really serious about preventing its citizens from travelling to Canada to gamble online from there:

U.S. begins air patrols on Montana-Alberta border

[Westland Bowl]

Looks like the US is getting really serious about preventing its citizens from travelling to Canada to gamble online from there:

U.S. begins air patrols on Montana-Alberta border

Well, I don't think that those air bases are specifically for preventing travel to Canada for purposes of gambling....afterall Windsor Ontario Canada does have land-based casinos to attract US citizens too. I believe Nigara Falls does too.

[cipher]

Looks like the US is getting really serious about preventing its citizens from travelling to Canada to gamble online from there:

U.S. begins air patrols on Montana-Alberta border

I can just see the headlines, "Bush authorizes Hell Fire missle strike on Canadian based Internet casino, no casualties but billions of U. S. & Canadian dollars unaccounted for."

Have a good one.

[lots0]

I’ll believe California enforces its anti gambling law when I see the Actor James Woods and his side kick and one time child actor Vince Van Patten in handcuffs headed toward the L.A. County Jail for owning, running and playing at Hollywood Poker.

All the anti-gambling laws in California don’t mean a thing, as long as the people in charge have decided not to enforce the law.

The same thing goes in all the states. One thing about the U.S., if a law gets passed that most people don’t like, most people ignore the law and the government knows it enforces the unpopular law at its own risk. No politico is going to publicly piss off a majority of the voters by enforcing an unpopular law. California will not even enforce the Federal Marijuana laws, does anyone think they are going to enforce this travesty of a law?

And this is an unpopular law, that EVERYONE I have spoken too about this, even a few local religious leaders in my community, think this is a draconian law trying to force a few peoples religious and moral believes down everyone’s throats.

I think this law will last about as long as the power of the Neo-Con Republicans lasts in the Congress... November 9th can’t come soon enough for me.