This Editorial Needs Your Attention

jerryg

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Feb 6, 2002
This guy obviously has a very jaded view of the industry (and tribal gaming too for that matter), and of an open marketplace in general where competition is concerned. Please drop by the site and post your comments to his story to support your right to choose between net gambling and making an expensive trip to Nevada.

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Feds continue Internet gambling crackdown

Guy W. Farmer
Special to the Appeal
January 28, 2007

I was pleased to report several months ago that the federal government had finally decided to crack down on unregulated Internet gambling Web sites based in Central America and the Caribbean, where law enforcement is virtually non-existent. I applauded when the Justice Department charged seven officers and employees of a Costa Rica-based sports betting Web site with racketeering, and mail and wire fraud.

Specifically, BetOnSports.com is accused of accepting billions of dollars worth of wagers from U.S. residents by phone and over the Internet without paying federal excise taxes. The Justice Department wants the Web site to forfeit $4.5 billion in illegal profits.

And earlier this month the Feds arrested two founders of Neteller, a company that processes Internet gambling transactions, and charged them with funneling billions of dollars in illegal gambling proceeds to overseas betting operations. The charges against former Neteller directors Stephen Lawrence and John Lefebvre, both Canadian citizens, were contained in two criminal complaints unsealed in U.S. District Court in Manhattan.

Federal prosecutors said the men knew when they took their company public that its Internet gambling operations were illegal in the U.S. When the indictments were announced, Assistant FBI Director Mark Mershon said the multi-billion-dollar online gambling industry is "a colossal criminal enterprise masquerading as a legitimate business." Is it ever!

According to the Associated Press, "Neteller is an Internet payment services company that has grown in popularity as an increasing number of credit card companies have begun refusing to accept payments to online gambling sites." Prosecutors assert that in 2005 Neteller processed more than $7.3 billion worth of online bets, 95 percent of which were derived from illegal Internet gambling sites. The company, founded in 1999 on the Isle of Man (of all places), is traded publicly on the London stock exchange.

Last October, President Bush signed federal legislation prohibiting U.S. banks and credit card companies from processing payments to gambling Web sites. Apparently, the new law has hurt publicly traded gambling operations but has done little to stop Americans from gambling online. Industry experts say the law has been a boon to smaller, privately held companies that are exempt from governmental regulation. Hundreds of these unregulated gambling Web sites are based on small Caribbean islands, where law enforcement gives them a free pass because of the revenue they generate for cash-strapped governments.

In a particularly brazen move, the island nation of Antigua has filed a complaint with the World Trade Organization charging that U.S. anti-Web gambling laws violate American free trade obligations. That would be laughable if it weren't serious because those who defend these unregulated Web sites are engaged in a massive ripoff of the gambling public. But anyone who provides one of these sites with his or her credit card number deserves whatever comes next. Caveat emptor (let the gambler beware).

Let me make it clear that I'm not referring to Internet gaming - the electronic versions of Dungeons & Dragons and other just-for-fun games. In a previous column, I failed to distinguish between Internet "gambling" and "gaming," and heard from angry readers who like to play online games where no money changes hands.

Indian casinos must be mentioned in any discussion of unregulated gambling because they represent a direct economic threat to struggling Reno/Tahoe casinos. Tribal gambling is now a $20 billion industry with 228 tribes operating some 400 casinos, or slot arcades, in 28 states. Because Indian casinos constitute a serious economic challenge to Nevada, I once again urge state lawmakers to prohibit our gaming licensees from operating tribal casinos that damage our economy.

One such Nevada licensee is Station Casinos, of Las Vegas, which operates the highly profitable Thunder Valley Casino just off I-80 near Auburn, Calif. Since California's Indian casinos don't pay their fair share of state and local taxes, they have an unfair advantage over their Nevada competitors, and fall far short of our tough regulatory standards. Indian tribes may claim that they're policing their own casinos, but that's like putting the fox in charge of the henhouse.

Bottom line: Indian and Internet casinos constitute unfair competition for Nevada and should be monitored closely by federal and state regulators to ensure that they're complying with all applicable laws. And when they aren't, they should be prosecuted to the full extent of the law as the Feds are doing in the BetOnSports and Neteller cases.



FIRST LADY Dawn Gibbons will be wearing an expensive Armani gown to the Governor's Inaugural Ball, which raises a question: So what? This is Nevada, not Paris.



Guy W. Farmer, of Carson City, worked for Nevada's gaming control agencies during the period 1963-66.

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jerryg

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Feb 6, 2002
I am really enjoying the comments posted so far. Let's keep them coming to limit this guy's ability to misinform his readers.

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Re: Feds continue Internet gambling crackdown
by Anonymous on Sunday, January 28 @ 04:35:05 PST
This is one of the most jaded, narrow minded views I have read on the topic. To begin, most anyone who is involved with the gaming industry knows that these charges are trumped up (at best), and is basically a case of throwing everything you can against the wall in hopes that at least one will stick. It may or may not work, but you present these men as if they are mafia or something, when they are, in fact, well respected business men and leaders of known international gaming brands.

You also state that tribes and net gambling represent unfair competition for Nevada. That is complete rubbish. There is nothing unfair about it - in fact, this form of competition is quite healthy for any legitimate business. Nevada casinos had it too good for too long, and now that they have to actually compete in a global market we are expected to feel sorry for them?

Go back to the 60s. You're out of your league in today's environment.

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Re: Feds continue Internet gambling crackdown
by Anonymous on Sunday, January 28 @ 04:49:52 PST
The arrogance of Americans never ceases to amaze me.

How is it within the rights of the USA to have a crackdown on foreign businesses who are not even operating in the USA?

Whats next a crackdown on the evil drug dealers in Amsterdam posing as coffee shops?

This is beyond ridiculous and really displays the true ignorance of the Americans and their false belief that they own the world, while at the same time they cannot grasp why the world seems to hate Americans.

I would love to see some US Business people arrested while traveling abroad for doing something that is legal back in the United States.

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Re: Feds continue Internet gambling crackdown
by Anonymous on Sunday, January 28 @ 07:22:21 PST
You sound just like the Feds trying to monopolize a revenue stream only you want to do it for Nevada and they want to do it for the US as a whole. Fair business practice? I would challenge anyone to say it is.

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Re: Feds continue Internet gambling crackdown
by Anonymous on Sunday, January 28 @ 08:26:40 PST
Mr. Farmer, I could not disagree with you more. First off, the bill that passed was one that received no vote by congress - it was an "ear mark" bill.

Second point, my husband has been playing poker for 25 years. When we first moved here to northern Nevada there were very few places to play live or tournament poker. The popularity of Online Poker and televised tournaments has been a real boon to the casinos. Now you will find that most of the casinos have put in poker rooms that are filled to capacity most of the time.

The ban on internet gambling will hurt the casinos because the players will not be spending hours playing at home then eagerly running to
the casinos to play in a live game. It will be like a "fad" that has run its course and the casino poker rooms will close down again.

At home internet poker also allowed people to play from their home at their convenience and comfort level. One gentleman who protested the ban is handicapped and cannot easily get into a casino. He said this gave him hours of pleasure without the physical hassle.

I could go on and on with more examples, but my point is that there are other sides to this issue that the public was not given a chance to present. There were ways around the regulation issues, and solutions could have been found. A few congressmen decided they didn't want it, so everyone else that does.

Dee S

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Re: Feds continue Internet gambling crackdown
by Anonymous on Sunday, January 28 @ 10:11:38 PST
This article is rife with mistatements and misrepresentations regarding the status of the current issues involving internet gambling. As a long time practicing attorney involved in internet commerce I am shocked this is included in your publication.

First, the recent crackdowns primarily are focused on gambling businesses that are publicly traded companies, many located in the UK (United Kindom). Contrary to the assertions of the author, internet gambling is widely legal worldwide, including the UK and much of Europe, not to mention a majority of jurisdictions around the globe.

What the recent "moral" crusade has done is analogous to prohibition in the 1920's - most of the legitimate operators, with the regulatory landscape that goes with them, have been chased out of the market. I might point out that MGM was one such operator at one time. Internet Gambling will not be reduced one iota but more shady characters will certainly get involved in the business. They frankly should have named the recent legislation the Organized Crime Full Employment Act.

The true motivation of the author, as with most of the enforcers in this area, is protectionism pure and simple. The complaints about indian gambling and competition to Northern Nevada casinos are stiking in a system that supposedly supports freedom of trade and choice. Sir, your slip is showing.

Most offesive of all is the mischaracterization of the current WTO case being brought by Antigua. First, Antigua has prevailed over and over again because the U.S. regulation clearly is protectionist in nature. There are exemptions for online horse betting, lotteries and intra-state online gambling. Nevada has shown a great deal of interest in intra-state online gambling and was a proponent of the exeption. Considering online gambling is legal in most jurisditions, it is laughable that a publication arising from Nevada is making such pious ill-informed condemnations. Antigua will continue to win in the WTO court. Look next to the UK jumping into the fray with a request for judicial notice on the findings. Then let the trade wars begin. All this in order for a small monopoly of U.S. Gambling interests, be they indian casinos, river barge casinos, or the struggling casinos of Northern Nevada, to keep a larger share of the gambling pie.

Ted Burgess
 

REOdeathwagon

Dormant account
Joined
Mar 31, 2006
Location
arizona
They frankly should have named the recent legislation the Organized Crime Full Employment Act.

Absolutely hilarious!


CHEERS!
 

jinnia

Dormant account
Joined
Mar 7, 2003
Location
Bite, ME
Hi JerryG,

with the way the US gov operates, in ALL levels, this seems fitting....

Terrorism:

  • is defined by the US Department of Defense as "the unlawful use of -- or
    threatened use of -- force or violence against individuals or property to
    coerce or intimidate governments or societies, often to achieve political,
    religious, or ideological objectives."

  • use of terror, especially the systematic use of terror by the
    government or other authority against particular persons or groups; a
    method of opposing a government internally or externally through the use
    of terror.
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So now I ask you, "Who are the 'real' terrorists?"
 

DakWinner

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Joined
Aug 9, 2007
Location
USA
WS - So was I from both points. Indian gambling is regulated by the US government. They have to go through outside audits. Nevada has to get used to the competition from online and Indian casinos. I do wonder about some of these so called Natives getting US government permission to be a tribe and then they start a casino. As Trump said "I look more Indian than they do!". It's all about the money. My tribe has a casino but doesn't seem to operate it in a professional manner to bring in enough business.
 
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