Alderney Gambling Control Commission Interview: APCW Perspectives Weekly for October

BingoT

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Alderney Gambling Control Commission Interview: APCW Perspectives Weekly for October 7th, 2011

EXCLUSIVE APCW INTERVIEW: This week J Todd travels to the Global Gaming Expo in Las Vegas. In his exclusive video interview with Andre Wilsenach, the CEO of Alderney Gambling Control Commission, Mr Wilsenach clearly points the blame at Full Tilt Poker for their 'deceptive' reporting and business practices. However, this leaves many to wonder if the AGCC really believes they are free of blame in this situation, and how "regulation" will change in the evolving online gambling and poker industry.

 
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4 of a kind

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I stopped listening to this idiot half way through this. Regulating based on trust!! What a perfect example why online gaming is what it is today.

Players that lost money through Full-Tilt should go after this idiot and the phony regulating commission he represents. This just keeps getting worse every time another idiot affiliated with this mess opens their mouth.
 

Simmo!

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...and the phony regulating commission he represents..

Must admit I thought Alderney got the FTP licence decision wrong from the moment it was announced but "phony"? Nah LOL. I'd love to know how you classify Costa Rica 4oak :D
 

DiamondGeezer

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Hardly their fault the DOJ didn't inform them. I don't see how any regulator is going to cope when a government starts seizing funds covertly.

I guess you could say Alderney badly misread the political situation and allowed the DOJ to make fools of them.

The stuff he said about ringfencing funds not making any difference if a company went bust due to the banks having claims on the ringfenced funds was very interesting I thought. However in this case they could clearly have acted had the funds been ringfenced. They really ought to have been aware a DOJ seizure was highly likely.
 

Tengil

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Hardly their fault the DOJ didn't inform them. I don't see how any regulator is going to cope when a government starts seizing funds covertly.

I guess you could say Alderney badly misread the political situation and allowed the DOJ to make fools of them.

The stuff he said about ringfencing funds not making any difference if a company went bust due to the banks having claims on the ringfenced funds was very interesting I thought. However in this case they could clearly have acted had the funds been ringfenced. They really ought to have been aware a DOJ seizure was highly likely.

Thats why there is segregated and protected. They even mention it themself on their site.

AGCC has zero credibility left, as 4OAK said basing your regulation on basically trust is no regulation at all. And to have the audacity of trying to act like the victim.

Even I could offer similar "regulation". AGCC you are just a giant facepalm.

And LOL TonyG is going to sue them.
 

Simmo!

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AGCC has zero credibility left...

Or more accurately, some people think that AGCC made a mistake and for those individuals it lost credibility as a result. Some people, like me, think they made an ill-informed decision but in fact they are generally very good at policing licencees and they shouldn't be hung, drawn and quartered on one faux pas.
 

vinylweatherman

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Hardly their fault the DOJ didn't inform them. I don't see how any regulator is going to cope when a government starts seizing funds covertly.

I guess you could say Alderney badly misread the political situation and allowed the DOJ to make fools of them.

The stuff he said about ringfencing funds not making any difference if a company went bust due to the banks having claims on the ringfenced funds was very interesting I thought. However in this case they could clearly have acted had the funds been ringfenced. They really ought to have been aware a DOJ seizure was highly likely.

I thought operators licensed by Alderney were prohibited from taking bets from the US in any case, and as such, DoJ actions should have had no effect on funds owned by non-US players. Since pretty much "everybody knew" that Full Tilt WAS heavily involved in taking US bets, the AGCC should have known, and should have either suspended thir license, or demanded proof that the US operation was 100% separate from the non-US one so that nothing that happened in the US could affect non-US players.

The other thing is that the AGCC bowed to pressure from Full Tilt and held the hearings in secret. This begs the question of who is in charge, the AGCC or Full Tilt. This made the AGCC appear weak, and easily bent by pressure from those it licenses. This further dents confidence in their abilty to enforce their regulations.
 

bpb

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Or more accurately, some people think that AGCC made a mistake and for those individuals it lost credibility as a result. Some people, like me, think they made an ill-informed decision but in fact they are generally very good at policing licencees and they shouldn't be hung, drawn and quartered on one faux pas.

Faux pas!?!?!??!?!? Are you #*!$*! kidding me!?!?!??!

They failed to notice a several hundred million dollar shortfall in segregated accounts holding players deposits.

That isn't a faux-pas. That's criminal negligence at best, and only if you're willing to give them the extreme benefit of the doubt. It's not a stretch to imagine that they were accepting briefcases full of cash as bribes in order to look the other way.
 

Simmo!

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Faux pas!?!?!??!?!? Are you #*!$*! kidding me!?!?!??!

They failed to notice a several hundred million dollar shortfall in segregated accounts holding players deposits.

That isn't a faux-pas. That's criminal negligence at best, and only if you're willing to give them the extreme benefit of the doubt. It's not a stretch to imagine that they were accepting briefcases full of cash as bribes in order to look the other way.

Arguing over my choice of words is just semantics. We are all of the opinion that they cocked up. My point is: some people will think they aren't fit to licence ever again, some believe that one mistake doesn't make someone rotten to the core.
 

jetset

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Alderney issued an intriguing 'correction' a couple days ago:


ALDERNEY CLARIFIES NUMBERS INVOLVED IN FULL TILT POKER DEBACLE (Update)

"Erroneous" statement in Tribunal's findings is "not of significance"

Thursday saw the issue of a rather intriguing statement on the Full Tilt Poker issue from the Alderney Gaming Control Commission which read as follows:

"AGCC wishes to correct and clarify an erroneous statement contained in the Commission tribunal’s published determination notice of the hearing into Full Tilt, which includes the statement:‐ “the individual seizures made by the Department of Justice during the period 28th June 2007 to 20th June 2011, which amount to a cumulative total of approximately $331 million US Dollars.”

"The underlying evidence in the hearing clearly demonstrated that $331 million was the total of funds unavailable to Full Tilt, of which DOJ seizures formed only a part.

"The mis‐statement is thus not of significance in the Commission’s assessment of the matter."

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The amount of money involved has been the subject of much industry and player discussion since the AGCC pulled FTP's licensing, mainly because of the disparity in the amount that FTP said - in a statement last August 31 - was seized over the two years before Black Friday.

In that statement, FTP claimed that the US authorities had seized $115 million in player funds sitting in US banks.

Unfortunately the AGCC 'correction' still does not definitively explain the whereabouts and disposal of the $200 million difference, and that has already triggered speculation regarding FTP's reportage to its licensing jurisdiction, and the apparent reliance by that jurisdiction on numbers supplied to it rather than independent checking audits carried out for it.

Either way, the players remain unpaid and the crisis continues.
 

binary128

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Sadly, I can provide little data on this topic, mostly questions.

I believe that the AGCC's primary accreditation requirements could be accurately described as a Quality System Audit of the Gaming System.

I know that they subcontract much/most of their initial accreditation investigation to qualified and approved organizations, like iTech Labs, TST, etc. (Documentation on their web site refers to these subcontractors as "Testing Houses".)

I see very little on their web site that has anything to do with what could be referred to as "Financial System Audits" or Financial System Requirements. (I do see some references to company finances, but not Financial System Requirements: the 2 things are different.)

Since all of this has to do with the financial management of the company, I think the question is:

Does the AGCC have any requirements for their licensees regarding the performance of annual financial audits, by AGCC-approved auditors (PricewaterhouseCoopers, Ernst & Young, Deloitte & Touche, et. al), and the subsequent reporting of the auditors findings to the AGCC?

Based on the magnitude of this mess (hundreds of millions of dollars ain't chump change), one is left to speculate that the answer to this question is no.

Another question: if they don't have these requirements, then should they? What is the scope of their responsibilities? That is, if something goes wrong with anything, is it "their responsibility"? Where does Full Tilt end and the AGCC begin? Or vice versa?

As I said, I have no definitive data here, only questions.
 

jetset

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I believe that the AGCC's previous statements indicate that it did have a financial oversight involvement in addition to checking that the software was fair. The point is that that involvement apparently relied largely on what FTP was telling it rather than closer independent audit checks.

Regulators - or at least regulators worth their salt - generally do get involved with the financial side of player protection too - take for example the Isle of Man. After all, player protection is supposedly the principal reason for regulating :rolleyes:

One of the encouraging things about the developing Nevada online poker regulations (according to the most recent draft) is a requirement for player funds to be segregated and insured, which is as it should be imo.

I personally believe that AGCC's credibility has been damaged by the FTP debacle - and much of that is to do with the manner in which they have handled the issue. I would imagine they are now in the midst of assessing how bad a hit their reputation has taken, and what they need to do about damage limitation.

This sorry-ass affair will hopefully be a wake-up call to other jurisdictions - certainly those that take regulation seriously instead of just an easy way to make money.
 

binary128

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jetset,

I agree there is little doubt here: the AGCC really screwed the pooch on this one.

From what little I could gather from the AGCC web site, their financial requirements seem to be pretty basic stuff. (They'd have to be if "trust" was the foundation of their financial audit.)

I don't know the details of a full-blown PriceWaterhouseCoopers Annual Financial Audit, but I'm guessing that it is a great deal more detailed, and more stringent, than just the "basic stuff". I'm speculating, but I'd have to believe that a full PWC Audit would have uncovered this financial mess much earlier in the game.

I've inferred from some of your previous posts that you have some knowledge of the eCOGRA accreditation requirements. Do you know to what extent their requirements cover the company's financial systems? Do they, for example, require an annual Financial Audit performed by an eCOGRA-approved firm?

Re: wake-up call. Indeed. More hard lessons learned. It's just a damn shame that (once again?) the Players are the ones who had to pay the tuition bill.

Perhaps you've been keeping better track of all of this than I have. Didn't FTP have to pay the AGCC a pile of money to get their license back a month or so ago? And the US Feds took another pile of money starting, what, 2 years ago? And then didn't the US Feds take/seize another pile of money on "Black Friday"?

I don't remember the details, don't remember the amounts, but if you do then perhaps you can answer the question - are the only ones who are really getting screwed here the Players (and, of course, the pooch)?

Chris
 

jetset

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There are so many numbers being bruited about that, in the absence of a professional and structured communications service from FTP (which we have yet to see amid their use of a variety of individual channels and 'insider' spokesmen as opposed to a proper, coordinated and fully transparent approach), it's no wonder that there is confusion over the various amounts of cash involved and exactly where it has all gone. It's getting increasingly difficult to separate fact from speculation as this debacle unfolds further.

Regarding your question on eCOGRA, I think that may have been better directed to eCOGRA itself - I've always found them very forthcoming and open to questions.

I was referring principally to national regulators, especially in Europe, whereas eCOGRA is set up to develop and implement sound best-practice international business and operational standards with the ultimate aim of protecting players.

Nevertheless, there is some relevance to this organisation in that it is working closely with several national regulators; the European Union; EGBA (which has most of the major European groups among its membership) and advises, reviews and monitors a significant slice of the top tier one online groups in the industry.

To save you the time and trouble I emailed the CEO, Andrew Beveridge, this morning and this is a summary of what he told me regarding financial oversight (please feel free to contact him yourself directly if you wish to confirm this):

The bottom line is that to be effective the regulator needs to have a very good understanding of the licensee’s operations, and this cannot be obtained from a document submitted by the licensee describing how the operations are conducted.

Regular and independent compliance reviews - preferably on-site - conducted by professional auditors with extensive industry experience are necessary (ECOGRA's professional staffing includes trained auditors and IT specialists). These auditors need to perform ongoing data monitoring and to routinely review many different aspects of the licensee operation to obtain sufficient comfort that it is in a sound financial and operating position for the foreseeable future.

ECOGRA does not rely on statutory audits carried out by other financial auditors, mainly because the audited reports are typically made available 6-9 months after the year end and therefore don’t necessarily give an accurate indication of the company’s ability to pay its players at the time of a review.

"What we do require is that proper financial accounting systems and controls are in place at the operator level where the player balances are held, and we make sure through our audit work that this entity has sufficient liquid assets to cover player balances. In addition to this, we monitor the operator’s ability to pay its players through other indirect means, such as our dispute mediation and monthly payout percentage reviews, which enable us to see whether the operator is likely to be running into financial difficulties."
 

binary128

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jetset,

Thanks for looking into this.

I know that there are Quality System Standards (ISO 9001, TickIT, et. al), and that there are Auditing and Certification Organizations (Registrars/Certifiers like Bureau Veritas Quality International Ltd., Canadian General Standards Board and International Quality System Registrars) which go into a company and spend many days there performing Quality System Audits relative to these published standards.

After a company's Quality System has been certified, I know that the Registrars/Certifiers re-visit the company on an annual basis. These once-a-year audits are less intense than the initial Certification Audit. They may "broad brush" many areas of the Standard, and go into a few areas in greater detail.

I also know that there are Financial System Standards (IFRS - International Financial Reporting Standards, Canada GAAP, UK GAAP), and that there are Auditing Organizations (PricewaterhouseCoopers, Ernst & Young, Deloitte & Touche, et. al) which go into a company on an annual basis and spend several days "going over the books".

In my experience, Quality System Audits and Financial System Audits are 2 completely separate things, which are performed by 2 completely different types of companies, and focus on 2 completely different parts of a company's overall operation.

I believe that eCOGRA may be more comfortable in describing themselves as a Quality System Auditor (like Bureau Veritas Quality International) than as a Financial System Auditor (like PriceWaterhouseCoopers).

I agree with you: if I wished to pursue this further I would contact eCOGRA.

I was, however, puzzled by one eCOGRA statement:

ECOGRA does not rely on statutory audits carried out by other financial auditors, mainly because the audited reports are typically made available 6-9 months after the year end and therefore don’t necessarily give an accurate indication of the company’s ability to pay its players at the time of a review.

It is my understanding that a company which has gone through their annual Financial Audit is aware of the results of that audit immediately.

Chris
 

jetset

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I think your last post raises an interesting question, and I accordingly reverted to eCOGRA to ensure I have the right facts before disagreeing with your comment regarding its restriction to Quality System Auditing.

Here it is straight from the top man at eCOGRA:

"eCOGRA is unique in that it is quite capable of performing both quality system audits and financial audits.

"When eCOGRA was initially established in 2003, the eGAP compliance review work was outsourced to auditors PricewaterhouseCoopers (‘PwC’). In 2006 PwC withdrew its services to a large part of the online gambling industry. Consequently, eCOGRA established an in-house auditing function by employing key individuals previously involved in the PwC review work, and since then has recruited various other individuals who are qualified Chartered Accountants with Big 4 audit firm experience.

"As professional auditors, these individuals are governed by IFAC (the International Federation of Accountants), and are required to utilise IAASB (International Auditing and Assurance Standards Board) Auditing Standards, and are therefore quite capable of performing statutory financial audits.

"The organisation has been awarded ISO/IEC 17025:2005 testing laboratory accreditation by the United Kingdom Accreditation Services (UKAS), which is required by most EU jurisdictions to perform technical standards testing. eCOGRA also employs Certified Information System Auditors, and other IT professionals, for reviewing information security standards."

Regarding annual audits: What Beveridge meant is that assuming the financial year end is 30 June 2011, then the audited financials may only be prepared 6-9 months later. If eCOGRA use this report say in March 2012 when it performs its compliance review, then it only tells the eCOGRA auditors anything conclusive about the company’s financial position at 30 June 2011 and not at the time that eCOGRA is actually performing its compliance review.

"We therefore conduct our own audit procedures to establish the ability of the company to pay it’s players at the time of our review," Beveridge reiterates.

I'm not really happy interposing myself between you and eCOGRA - suggest if you have any further questions that you liaise direct.
 

binary128

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jetset,

Thank you very much for going to the time and trouble to get this information from eCOGRA.

I completely agree that you should not be in the position of Liaison between Galewind Software Corp. and eCOGRA, and I sincerely apologize for any statements or implications of mine which have created this inference.

I would like to say that Galewind Software Corp. has no intentions of seeking eCOGRA certification, now or at any time in the foreseeable future. The scope of their services far exceeds the scope of our needs. We would be well satisfied with the services of an accredited IT/Software Audit firm that is much closer to home.

I have actually communicated with eCOGRA previously (Andrew Beveridge, as a matter of fact), in early 2008, so going on 4 years ago now. Our communication was quite brief: I was simply comparison shopping for a provider for our monthly RTP Audits. (For reasons, I ultimately went with Certified Fair Gambling.)

That said, one may infer that this thread has drifted a bit off the mark with its questions/answers concerning eCOGRA. However, these questions do bear on the general issue of what the various "accreditations" truly mean to the Player, and to the industry in general.

(My questions arose from this perspective, and this perspective only. As a licensed and registered Human Being, I believe that I am allowed to ask questions. :) )

At one end of the spectrum we have what could be referred to as little more than a "rubber stamp". At the other end we have, what?

8 months ago the AGCC was seen, I believe, as one of the more aggressive accreditation organizations. Now, with this FTP swamp seeming to get deeper with each passing day, it has cast doubt on the efficacy of not only AGCC, but accreditation organizations on the whole. (Could any other accreditation organization have their own "FTP A-bomb" simply waiting in the wings, quietly approaching critical mass?)

I, for one, am very interested in and now, as a result of the information which you have provided, much more appreciative of the functional implications of what is behind the eCOGRA certification.

I believe that the information which you have gone to the trouble to collect and present is of great value to all of the readers of this thread, and to all of the members of this forum.

Chris
 

vinylweatherman

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jetset,

Thank you very much for going to the time and trouble to get this information from eCOGRA.

I completely agree that you should not be in the position of Liaison between Galewind Software Corp. and eCOGRA, and I sincerely apologize for any statements or implications of mine which have created this inference.

I would like to say that Galewind Software Corp. has no intentions of seeking eCOGRA certification, now or at any time in the foreseeable future. The scope of their services far exceeds the scope of our needs. We would be well satisfied with the services of an accredited IT/Software Audit firm that is much closer to home.

I have actually communicated with eCOGRA previously (Andrew Beveridge, as a matter of fact), in early 2008, so going on 4 years ago now. Our communication was quite brief: I was simply comparison shopping for a provider for our monthly RTP Audits. (For reasons, I ultimately went with Certified Fair Gambling.)

That said, one may infer that this thread has drifted a bit off the mark with its questions/answers concerning eCOGRA. However, these questions do bear on the general issue of what the various "accreditations" truly mean to the Player, and to the industry in general.

(My questions arose from this perspective, and this perspective only. As a licensed and registered Human Being, I believe that I am allowed to ask questions. :) )

At one end of the spectrum we have what could be referred to as little more than a "rubber stamp". At the other end we have, what?

8 months ago the AGCC was seen, I believe, as one of the more aggressive accreditation organizations. Now, with this FTP swamp seeming to get deeper with each passing day, it has cast doubt on the efficacy of not only AGCC, but accreditation organizations on the whole. (Could any other accreditation organization have their own "FTP A-bomb" simply waiting in the wings, quietly approaching critical mass?)

I, for one, am very interested in and now, as a result of the information which you have provided, much more appreciative of the functional implications of what is behind the eCOGRA certification.

I believe that the information which you have gone to the trouble to collect and present is of great value to all of the readers of this thread, and to all of the members of this forum.

Chris

Oh YES!

eCogra suffered their own blast when TUSK suddenly went bust one Wednesday afternoon, taking $Millions of poker players' funds with them. The only warning was that 2 weeks prior to this, eCogra suspended the seals of all TUSK (Casino Action) operations. Unfortunately, eCogra did not warn players of the impending disaster they obviously saw coming if TUSK did not take immediate action, and this left TUSK management free to spew BS on various forums where the seal suspension had been discussed. Essentially, they assured players that it was a purely administrative mix-up, and they would get their seals back in a short while, and that it would not affect players one bit. This was a lie, and eCogra had to sit back and keep quiet because their procedures prevented them from issuing a rebuttal of this BS statement to protect players.

I was ONE DAY shy of losing £2200 in the mess, having gotten the last bit out mere HOURS before the plug was pulled, and ONLY because I was VIP and had access to their unique "instant Neteller payments" where players actually processed their own withdrawals via a special interface they could log in to after having used the casino lobby to "transfer to eCash". This system was their unique selling point, no other operator had it, or has had anything like it since.

eCogra came under fire, especially from poker players who were left high and dry after Casino Rewards eventually rescued the casino side, and offered to reimburse players' balances in exchange for a cheap deal netting them a considerable player base.

The KGC had their own nuclear event when Absolute Poker got caught cheating "in house", and then got caught doing the same thing AGAIN some months later in a sister site, Ultimate Poker. The KGC only made matters worse for trying to play down the scandal, and merely giving them a "slap on the wrist".
 

jetset

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In the interests of accuracy I think it needs to be noted that in the Tusk affair eCOGRA was not monitoring poker operations but the casino activity, which is where the accrediatation was pulled as far as I can recall. Casino Rewards subsequently took over the player obligations so little harm was suffered in this area by players, but VWM is correct in noting that the poker debacle was an entirely different story with great harm done to players and millions lost.

The "slap on the wrist" that KGC administered in the Absolute and UB affair was, again as far as I recall, quite an expensive one - tens of millions of dollars in reparations and hundreds of thousands of dollars in fines. It took the Commission a while to get itself into gear, but it then mounted a comprehensive enquiry under Frank Catania and addressed the issue strongly imo.
 
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