Online Gaming News Weekly Review

UIGEA – A BURDEN WITHOUT BENEFIT

Competitive Enterprise Institute critical of attempt to use financial institutions to cripple online gambling
The Competitive Enterprise Institute in the United States has come out strongly against the use of financial institutions to cripple online gambling in the United States following a study of the Unlawful Internet Gambling Enforcement Act.  The act remains mired in a lack of clear regulations following widespread criticism of its impractcality.
Following a study of the implications of requiring the US financial industry to police unclear government enforcement policy on Internet gambling, the Institute claimed this week that the current laws have had damaging if unintended consequences far beyond their original target.
The report explains that the Unlawful Internet Gambling Enforcement Act (UIGEA), passed in October of 2006, has little to do with gambling itself, but is actually a wide-ranging regulatory mandate on banks, credit unions, credit card companies, wire transfer services, and even brokerages. The law forces financial institutions to cut off business with any entity that could possibly be engaged in online gambling transactions.
“The Act is unlikely to stop Internet gambling and could even threaten the stable, smooth operation of America’s banking system,” said Senior Fellow Eli Lehrer and author of the study Time to Fold the Unlawful Internet Gambling Enforcement Act .
“UIGEA and its currently proposed enabling regulations will undermine the financial privacy of all Americans and reduce the security of their bank accounts. In short, it makes almost no financial, social, or economic sense.”
Some members of Congress are at least aware of the problems with the gambling ban. On April 2nd, the House Committee on Financial Services is scheduled to hold a hearing titled “Proposed UIGEA Regulations: Burden without Benefit?” to detail what has gone wrong with its implementation and how to fix it. Ideally, however, they would go much further.
“Even before it considers proposals for the regulation of online gambling, Congress should consider an outright repeal of the Unlawful Internet Gambling Enforcement Act,” said Lehrer. “The law has very little to do with gambling and serves as a poorly thought-out banking regulation fraught with potentially perverse incentives. Quite simply, it is a bad law. Repealing it makes sense.”
UIGEA LAW TOO AMBIGUOUS TO WORK SAY HEARING WTINESSES
Widespread media coverage for Congressional hearings on Washington's problem law
The US and international media gave extensive coverage to April 2nd's Congressional hearings on the hopelessly bogged down Unlawful Internet Gambling Enforcement Act regulations, with the consensus across a wide cross section of witnesses appearing to be that the law was just too ambiguous to work, and could have a serious adverse impact on e-commerce.
In opening the discussions, “Proposed UIGEA Regulations: Burden without Benefit?” Congressman Luis Gutierrez, Chairman of the Subcommittee on Domestic and International Monetary Policy, Trade and Technology, said: "The focus of today's Subcommittee hearing is the proposed regulations to implement the Unlawful Internet Gambling Enforcement Act of 2006.
Gutierrez went on to summarise the status of the regulations, long delayed but finally submitted for discussion in October 2007 and the subject of over 200 formal critiques that mainly complained of the ambiguity of the regulations and the impracticalities and cost of implementing same.
"One of the most common complaints is that the proposed rules fail to sufficiently define key terms, leaving financial institutions with significant compliance difficulties," Gutierrez said. "For example, the regulation fails to adequately define what constitutes “unlawful Internet gambling” or a "restricted transaction," yet requires the financial institutions to make a determination on their own about what is lawful or unlawful.
"Consumers will be placed at risk of having lawful transactions blocked. It is easy to see how these regulations, if implemented in their current form, could wreak havoc on electronic commerce in the U.S."
The Congressman went on to give examples of the disruption the law could cause in areas of the economy such as general international remittances, and the heavy burden compliance would place on a financial services industry already labouring under overload during a time of economic and financial turmoil.
"Finally, I believe it is inappropriate to have financial institutions essentially acting as the final arbiter in determining which transactions are legal or illegal; especially when the result could be closing a consumer’s account," he said.
Feds admit to difficulties in crafting the regulations
Federal Reserve and Treasury officials gave evidence that they were struggling to craft the UIGEA rules because federal law is unclear about what type of gambling is illegal online.
"That is something we're really struggling with," Louise Roseman, the Fed's director of reserve bank operations and payment systems, said.
"The challenge we have is interpreting … federal laws that Congress itself isn't sure what they mean," Roseman said, adding that one company that processes illegal Internet gambling transactions may also transact legitimate transfers which should not be blocked, thus making it almost impossible, or at least very difficult, to determine how to block illegal online gambling transactions.
"It will be very difficult to shut off payment systems for use of Internet gambling transactions. The implementing statute will not be iron clad at all," she concluded.
 
Director Roseman reiterated her comments in an interview with Talk Radio News, an service that provides information through its Washington branch to the White House, Capitol Hill and Pentagon staffed bureaus, and a New York office with a United Nations staffed bureau.
Congress passed the UIGEA late in 2006, in a rushed, late night session as the then Republican-controlled Congress was about to recess for electioneering, and after the legislation was tacked on to a totally unrelated "must pass" bill. The legislation seeks to cripple the online gambling industry in the US, conservatively estimated to be worth $8 billion annually, by prohibiting financial transactions with online gambling companies.
Congress instructed the Federal Reserve and the Treasury Department, in consultation with the Justice Department, to come up with rules to enforce the newly passed act, and government drafters have been struggling with the task ever since.
Associated Press commented on the hearings, reporting that federal officials gave evidence that Congress' ban on Internet gambling
is so vague that figuring out how to enforce it is a struggle.
Whilst the Congressional ban sought to explicitly outlaw Internet gambling, it didn't offer a clear definition that everyone could agree on, instead referring to existing federal and state laws which themselves are ambiguous and provoke differing interpretations. It places the burden on financial institutions by prohibiting them from accepting payments from credit cards, checks or electronic fund transfers to settle online wagers. The regulation doesn't attempt a definition of illegal online gambling, since Congress didn't give one.
Bankers protest at the burden
Wayne Abernathy of the American Bankers Association told the committee that the law "makes financial institutions the police, prosecutors and judges in place of real law enforcement officers."
"The UIGEA and the Proposed Rule do not provide a rational path towards halting unlawful Internet gambling," Abernathy said. "The path leads to an increased cost and administrative burden to the banks and an erosion in the performance of the payments system, but it will not result in stopping illegal Internet gambling transactions.
"Imposing this enormous unfunded law enforcement mandate on banks in place of the government's law enforcement agencies is not likely to be a successful public policy."

Given that financial institutions process nearly 100 billion payments a year, according to Federal Reserve data, and given that other governments won't necessarily be cooperating, identifying which payments are gambling-related is no trivial task, said Leigh Williams, who spoke on behalf of the Financial Services Roundtable, which counts Visa, Mastercard, Bank of America, Wells Fargo, and other banks as members.
The U.S. government's "decision not to fully define unlawful Internet gambling places our members in a very difficult position," he said. "They cannot know if a transaction is restricted unless they have in hand specifics of the transaction that in almost all instances they will not have."
Williams expressed concerns that enforcement of the proposed rules "…could impose significant compliance burdens on financial institutions by increasing their role in policing illegal activities, determining whether a transaction is illegal, or by imposing ambiguous compliance requirements that could be subject to wide variations in interpretation by regulators and law enforcement agencies. We believe these functions are more appropriate for law enforcement agencies."
At the very least, Williams said, the U.S. government should provide a list of names of Internet gambling businesses that can be identified and blocked – something that the authorities are unwilling to do.  Federal regulators have said it would be too expensive for them to create a list themselves, arguing that "the government must engage in an extensive legal analysis to determine whether the gambling Web site is used, at least in part, to place, receive or otherwise knowingly transmit unlawful bets or wagers" and that due process safeguards "would result in considerable added costs."
Clearly with that Federal position in mind, Williams pointed out that 'monitoring of websites' was "…inappropriate to include in a financial institution's monitoring activity."

Other groups protested that the law does not apply to them. Poker players contend they're not covered because poker is a game of skill and not chance. Horse-racing was exempted by Congress in a notorious carve-out that has created expensive World Trade Organisation hassles for the USA, yet without settling definitively whether online wagering on races breaks the law.
House Financial Services Committee Chairman Barney Frank, who has introduced a bill to overturn UIGEA that is steadily gaining co-sponsors in Washington, described the UIGEA as "…a rather bizarre piece of legislation."
The committee heard that the law has caused international disputes, including an investigation launched earlier this month by the European Union after European betting companies complained that Washington's actions against them were protectionist and infringing world trade rules.
Nevada's casino industry is reportedly neutral on the regulations, instead supporting a bill written by Nevada Democrat Shelley Berkley, that calls for a full and independent study of online gambling in its entirety.
Closing the first part of the hearings, chairman Gutierrez advised Ms. Louise Roseman from the Federal Reserve Bank, and Ms. Valerie Abend from the Department of Treasury, to tread very carefully in proceeding with the proposed regulations. He remarked that there was more heated discussion, debate, and criticism of this topic than on any other his committee has seen in the year he has presided over it; "So be careful," he said.
Anti-online gambling politician Spencer Bachus – a Republican Congressman from Alabama, was almost alone in defending the UIGEA, again presenting a letter signed by 45 Attorneys General supporting the law, and again recounting the now ageing story of a high school student who robbed a bank to pay off an online gambling debt.
“Illegal Internet gambling is a scourge on our society that leads to addiction and gambling addicts then turn to crime to support their habit,” Bachus said, adding that in his opinion US banks have no problem working with law enforcement in ferreting out money-laundering and terrorist financing.
Addressing the letter from the Attorneys General, Congressman Frank pointed out that in his new law, the Internet Gambling Enforcement and Regulation Act (IGREA), there is a stipulation that allows individual states to opt out of allowing Internet gambling anyway.
Privacy concerns
Frank later made a telling point to the committee – that in the Treasury Department and Federal Reserve's 52-page draft regulations for the UIGEA, the word "identify" appears 61 times and "monitor" 18 times, yet the important word "Privacy" appears not once. Frank told financial industry witnesses that there was "…a conflict between the obligation imposed on you by the act…and the privacy expectations of your customers."
Several witnesses voiced concern at the apparent hypocrisy of a law that allegedly existed for moral reasons, yet permitted and even encouraged extensive gambling via the Internet on horse racing, fantasy sports and lotteries through legislative carve-outs.
Congressman Ron Paul, the libertarian-minded Republican presidential candidate, criticised the UIGEA, saying "..people should make their own decisions" regarding the use of their disposable income in the privacy of their own homes.
"Though I do not endorse gambling per se, peo
ple should make their own decisions. It's a personal choice. I've always been concerned about this type of regulation and legislation – it's likely to open the door (to control and regulation) of the Internet itself," he said.
The Hill, a Washington DC publication widely read by politicians, reported on the hearings, saying that Congressman Frank and his IGREA were betting on exposing the UIGEA's "…murky language" to help overturn it altogether.  The publication went on to cover the testimony of the many witnesses, most of whom were critical of the UIGEA and its impracticalities and difficulty in implementation.
Lobbyist groups such as the Poker Players’ Alliance and the American Bankers Association have spent millions of dollars fighting to repeal the law, The Hill observed.
Economic hard times, the restructuring of the Federal Reserve and the country’s monetary policy are only adding fuel to opponents’ fire, the report commented, quoting Congressman Frank, who said the Financial Services Committee as well as the banks and the Federal Reserve should be more focused on predatory lending right now instead of trying to crack down on people’s personal habits.
“Almost every sector affected by the (UIGEA) law complains about it,” said Frank, who argued the law turns banks into “gambling cops.”
Frank also said the law’s arbitrary exclusion for horse racing didn’t make any sense to him. “I thought it was gambling; perhaps it’s animal husbandry,” the politician quipped.
Ted Kitada from Wells Fargo said that his company is involved in 30 million transactions a day. Figuring out which of those could be related to Internet gambling is not only cumbersome, but it could lead to mistakes that annoy customers, especially because Internet gambling sites could disguise themselves, he opined.
Jeffrey Sandman, a spokesman for the Safe and Secure Internet Gambling Initiative, said that, "U.S. banks and credit card companies, along with every other type of U.S. company involved in payment systems, would be forced to spend substantial resources to comply with a ban on Internet gambling that can be easily circumvented by anyone in the U.S. that wants to continue to gamble online.
"Testimony from the federal regulators and representatives of the financial services community made clear today that the prohibition on Internet gambling isn't working now and will not work in the future," he added.
In summary, the Congressional hearings this week gave an opportunity for expert testimony to be heard and widely reported, providing further evidence that the ban on Internet gambling intended through the UIGEA simply won't work. Witnesses almost unanimously agreed that U.S. financial service companies would face serious regulatory burdens in attempting to enforce the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), a law that is not likely to stop millions of Americans from gambling online.
 
Testimony provided at the hearing can be found at http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr040208.shtml.
 
KNOW YOUR ENEMY
Prime Table Games active in run-up to Congressional hearings on Internet gambling
Timed to precede Wednesday's Congressional hearings on Internet gambling and the implications of the problematical Unlawful Internet Gambling Enforcement Act (UIGEA), a land casino supplier has come out strongly against the online industry in an expensive, full page statement in the global edition of the respected Wall Street Journal.
Derek Webb, founder of Las Vegas-based Prime Table Games which placed the advert has featured in previous in anti-online gambling attacks.
Headlined "Who Will Face the Issues," the WSJ statement outlines the perceived regulatory problems associated with international Internet gaming, citing gaming fraud, consumer protection and protection of intellectual property rights as major concerns.
"It is well known that there are off-shore based Internet gaming operators who are engaged in deceptive practices with American consumers and international players, and there is no adequate system in place to ensure full and appropriate regulation. Congress needs to take action soon, or these practices will only get worse," the statement asserts.
Prime Table Games urges Congress to adopt specific regulatory strategies for online gambling consumer protection, including:
Limitations on solicitations and incentives to gamble, such as bonuses and cash back
Prohibition of affiliate relationships
Standard player verification procedures
Giving players the ability to self-exclude and have it automatically apply to all online gambling sites
Site operators assume responsibility for identity verification
Internet gambling sites be required to verify that players can afford to gamble at their chosen level.
Internet gambling debts shouldn't be legally recoverable, and players who don't pay gambling debts should automatically be placed on an exclusion list.
"Internet gaming, by its very nature, has great potential for abuse," Webb said in a supporting press release. "Site operators also should pay fees towards problem gambling treatment and research."
On Wednesday, the House Subcommittee on Domestic and International Monetary Policy, Trade and Technology will meet to discuss the proposed and much criticised UIGEA regulations.
CASINO ACTION LATEST – LIQUIDATOR'S WEBSITE
Poker players now have a destination for their claims in Tusk debacle
Players at Casino Action poker websites, which were not taken over in the rescue operation by Casino Rewards (see previous InfoPowa reports) now have an online venue where claims against the Tusk Corporation which owned Casino Action can be lodged.
Tusk has gone into liquidation, with the Brisbane based liquidator Sims Partners overseeing the process according to an update press release from Microgaming this week.
Sims has apparently added Tusk Corporation to the ‘companies currently in administration’ section of its website, along with contact details for any claim. The page can be found at http://www.simspartners.com.au/creditors_current-administrations.php and appears under the heading “Tusk Investment Corporation (In Liquidation)”
Microgaming recommends that any player impacted by the Casino Action/Tusk shutdown submit their claim directly to Sims Partners via the web page. 
The Australians behind Tusk Corporation remained in the shadows this week, apparently eschew
ing any obligation to communicate with the public or their former players on the failure of their company.

GTECH ACQUIRES MAJORITY HOLDING IN ST MINVER PARENT
Euro 28 million paid for successful white label company in show of confidence in the industry
GTECH Corporation, a subsidiary of Lottomatica S.p.A. has agreed to acquire 90 percent of Gibraltar-based St Enodoc Holdings Limited and its subsidiaries, including St Minver Limited, a highly successful provider of end-to-end white label gaming services.
GTECH will pay Euro 28 million for the 90 percent equity stake on a cash and debt free basis at closing, and up to an additional Euro 13.6 million based on the performance of the business in 2008 and 2009. The acquisition, which is expected to be completed within the current quarter, is subject to regulatory and other closing conditions.
Ten percent of St Enodoc will remain with Gary Shaw, founder and Chairman, until at least 2012, at which point both Shaw and GTECH have the right to cause GTECH to acquire Shaw's remaining shares.
GTECH expects to fund the transaction from existing cash balances. In its last reported fiscal year ended June 30, 2007, St Enodoc Group had total revenues of approximately Euro 13.7 million.
"As we continue to expand our presence in regulated Internet-based gaming, St Enodoc is a logical fit," said Jaymin B. Patel, GTECH President and CEO.
"The St Enodoc group has provided white label management services to some of the most recognised brands in Europe operating interactive bingo, poker, and casino games including specialised support for peer-to-peer networks around managing fraud, collusion, and various tournaments.
"For companies in both gaming and non-gaming industries that want to offer Internet-based gaming, St Enodoc provides solutions to afford these organisations the ability to maintain their brand and customers while essentially outsourcing the gaming operation to St Enodoc."
"With more gaming markets around the globe approving and regulating interactive gaming channels, GTECH will be well positioned to provide a full- service solution or part thereof," Patel added.
"As the market enters a new phase of development, industrial scale on a global basis will determine which businesses succeed," said Gary Shaw, founder and Chairman of St Enodoc. "The St Enodoc management team is delighted that it can leverage its Internet gaming capability to be part of one of the companies that will shape the future of the gaming market."
The regulated Internet-based gaming market generates an estimated Gross Gaming Yield of $15.1 billion annually, claims GTECH. Lottomatica Group believes this market is poised for continued growth, and there will be an increasing demand for Internet-based gaming services and technology in regulated markets in Europe, Asia, and Latin America.
"Given that St Enodoc's strategy has always been to operate in markets where its offerings are legal and regulated, joining a truly global, highly- regulated business like GTECH, made the most sense," said Jim Ryan, CEO of St Enodoc. "We can now leverage GTECH's unrivalled international footprint to further the reach and scale of our games and services."
Founded in September 2003, St Enodoc currently employs approximately 165 people in Europe including London and Gibraltar as well as Hyderabad, India. GTECH intends to maintain St Enodoc as a separate operation and the St Minver brand identity.
The founder and entire senior management will remain with the organisation to continue to help grow and develop the business. Currently, St Minver has 98 gaming sites and 76 media, lifestyle, and other branded partners using its white label services.
The company does not accept wagers from the United States.
GTech has been buying into online gambling bigtime recently. The company has already bought its way into Boss Media and betting technology firm Finsoft and is building an impressive portfolio, apparently developing a strategy based on the Lottomatica contacts and clients in lottery operations across the world, giving significant access to state monopolies. This has the potential to provide considerable momentum in any future online gambling ventures.  
St Minver operates one of the largest bingo networks in the world and offers pooled bingo rooms by currency, each with uniquely managed and optimised schedules. In addition, St Minver supports Boss Media's International Poker Network, the fifth largest European poker network hosting more than 12 000 players concurrently at peak times.
Lottomatica is majority owned by De Agostini, which belongs to a century-old publishing, media, and financial services group. Lottomatica is publicly traded on the Italian Stock Exchange (LTO), and in 2007, had approximately Euro 1.7 billion in revenues and 5 900 employees in over 45 countries when combined with GTECH.
SMART MOBILE MOVE BY LADBROKES
Brit betting group will temporarily take over mobile portal
The UK gambling group Ladbrokes has a bold addition to its marketing plan for the Grand National horse race taking place this weekend – it is taking over the busy home page of the Planet 3 mobile portal for 24 hours.
The bookmaking giant is reportedly keen to extend its cross-platform presence for the UK's largest single sports betting event.
The campaign, booked by the mobile agency Inside, comes hot on the heels of Ladbrokes' first bout of mobile display advertising, which took place last week in the run-up to the Cheltenham Festival.
Launched in 2005, Planet 3 is owned by Hutchison Whampoa of Hong Kong, and claims it is "not a telco, not a media company, not a technology company, but all three,” according to CEO Bob Fuller.
Fuller claimed that 3 was the embodiment of convergence, the long-anticipated coming together of the entertainment and telecom industries. As Britain’s first “third generation” or 3G mobile company, 3 had more experience, and more understanding of what customers want, than its larger rivals, he said. ITV and Sky believe that mobile is the future of media, and the BBC is moving in that direction, he opined.
The device that will put all this entertainment into the hands of consumers “…won’t be the iPod, it won’t be a portable games console . . . in time it will be the mobile phone”.
DUTCH SETBACK FOR UNIBET

Netherlands appeal court supports prior local ruling
The dispute between Dutch gambling monopoly De Lotto and London-based online betting firm Unibet over access to Dutch gamblers could escalate to a higher European court following an appeals court decision against Unibet in the Netherlands last week.
The appeal was launched by Unibet following a decision by a court in Utrecht last October to impose punitive fines on Unibet for its continued advertising and attempts to facilitate Dutch wagering on football games. De Lotto laid the charges which resulted in the court ruling against Unibet, ordering it to stop taking bets from Dutch citizens and imposing a non-compliance penalty of Euro 100 000 per day up to a maximum of Euro 3 mil
lion.
Unibet contended that in terms of European Union treaty obligations it was entitled to access the Dutch market.
Earlier this month a judge in Utrecht provisionally ordered Unibet to immediately cease its Dutch activities in interim proceedings that the Dutch Lotto company again instigated.
This week a De Lotto spokesman claimed the monopoly has prevailed in the appeal, although confirmation on this was not yet available from Unibet. Media reports from the Netherlands indicate that the appeal ruling is the 17th occasion on which Dutch judges have ruled against EU companies seeking to access the Dutch online gambling market.
The appeal court ruling is of particular interest in that it noted that its interpretation of the law differed from the European Union treaty calling for free movement of goods and services between European Union member nations.
The Dutch appeal court is reported to have acknowledged that the European Union did not share its opinion on the issue and that proceedings against the Netherlands over access to the Dutch online gambling market are likely to occur.
Going back as far as 2006 the European Commission has urged Dutch compliance with the EU trade accords, and it has recently increased the pressure. Continued non-compliance could result in the issue being escalated to the European Court of Justice.
Commenting on the appeal finding, De Lotto director Tjeerd Veenstra remained adamant that his company would not back down: "Illegal gambling threatens both the integrity of the sport as well as donations to the sport and other good aims. That is the reason why [De Lotto] fights rock hard for the conservation of these interests."
Since its establishment in 1961, De Lotto has made substantial donations to Dutch sport totalling Euro 1.1 billion, the company has repeatedly asserted.
PRESSURE BUILDS ON USTR REGARDING WTO SETTLEMENT
National security is not an acceptable response, say leading politicians
The US Trade Representative at the World Trade Organisation was faced with some pointed questions on witholding information by two influential Congressmen this week.
Barney Frank, chairman of the powerful House Financial Services Committee, and Ron Paul, the ranking member of the House Sub-committee on Domestic and International Monetary Policy, Trade and Technology were following up on media reports that Susan C Schwab's office had declined to release details of a trade deal with the EU, Japan and Canada on grounds of "national security" when this information was requested by freelance journo Ed Brayton (see previous InfoPowa report)
The settlement concerned compensation for the unilateral withdrawal by the USTR of American WTO obligations on gambling.
In a letter dated March 14 to Schwab the two Congressmen not only requested details of the settlement, but asked for a justification of the use of the "national security" classification to withold this information.
“We find this (citation of national security) unacceptable," the Congressmen wrote. "If, in fact, there were some additional trade concessions that were made that do have national security implications, we request a secure briefing on those issues.”
However, the letter adds: “If this is merely an attempt to avoid revealing the cost of these trade concessions, either because they would be viewed too costly by the United States or not costly enough by the negotiating countries, this Freedom of Information Act denial on the grounds of ‘national security’ would appear to be a misuse of the FOIA process.”
The letter concludes: "Ultimately, we believe that this withdrawal (by the USTR of gambling obligations at the WTO) was a mistake, because it is in furtherance of a policy – the UIGEA – which is an inappropriate interference with the personal freedoms of American citizens that we are working to undo."
The letter ends with the expectation that the USTR will furnish a prompt response.
USTR MISSES ANOTHER WTO DEADLINE
Online gambling dispute with Antigua and Barbuda rolls on
As March faded into April this week it appeared that the US Trade Representative at the World Trade Organisation had once again missed a crucial deadline in its dispute with the government of Antigua and Barbuda over online gambling.
The Antigua Sun newspaper, which has been diligently following the many twists and turns in this long-running saga, reported that no word on the issue had been received by the Caribbean islanders. Neither Antigua and Barbuda’s attorney in the matter Mark Mendel nor the local Directorate of Gaming has received any communication from US officials.
In a process that has seen many delays and missed deadlines, the apparent failure of the US to put forward a settlement proposal by the end of the month was apparently met with an air of resignation in Antigua and Barbuda, with officials continuing to adopt a “wait and see” approach to the protracted negotiations process.
The settlement proposal has the potential to end the trade battle over Internet gaming which has dragged on for more than five years.
Mendel has made it clear that any settlement would be expected to address the United States’ failure to comply with the World Trade Organisation (WTO) ruling on non-discriminatory US access for Internet gaming operators as well as Antigua and Barbuda’s claim for compensation following the unilateral US withdrawal of its commitment to provide market access to the sector under the WTO General Agreement on Trade in Services.
The former issue was the subject of a US$21 million sanction award against the US by a WTO Dispute Settlement Body arbitrator last December.
On the latter issue Antigua and Barbuda filed a notice in January requesting arbitration by the WTO.

ANOTHER 60 MINUTES SHOW ON INTERNET GAMBLING IN  PROSPECT
Popular investigative television program asking questions regarding the Absolute Poker scandal
Top online poker bloggers, posters and writers are predicting that the popular US television investigative program "60 Minutes" could be about to launch an expose on the Absolute Poker cheating scandal (see previous InfoPowa reports). The program, which has a viewership in the millions, has previously covered online gambling in 2001, 2005 and 2006…and not always in the most positive terms.
Top blogger and 2+2 contributor Nat Arem, who made a major contribution in investigating and exposing the Absolute Poker.com affair which resulted in the company paying a $500 000 fine to the Kahnawake Gaming Commission that regulates the company, wrote on his blog Nat Arem.com that he has known about the new story for some weeks but had respected the confidentiality requested by the 60 Minutes produce
r.  However, as several other poker information websites had picked up on approaches to industry personalities made by the producers, he would reveal what he knew.
"A few weeks ago, I was contacted by 60 Minutes in conjunction with a reporter from the Washington Post regarding a story about the Absolute Poker scandal from last fall," Arem wrote. "I was told that they wanted Adanthar (another 2+2 investigator) and myself for on-camera interviews with Steve Kroft. I later found out they were also interested in interviewing Michael Josem and Marco Johnson.
"Basically, I spent a little while on the phone with the producer and the Washington Post reporter and recapped the whole story as well as I could from memory. I talked about my involvement and contribution, along with all the other people who were involved.
"After that conversation, I found out that 60 Minutes plans on going to a number of different locations. I’ve heard that Canada, Costa Rica and Las Vegas are all possible travel locations. I may or may not be meeting up with 60 Minutes in Costa Rica, if and when they come down. There’s also the possibility that I will end up on-camera in Atlanta.
"In terms of agenda, I’ve been told that the goal is to “tell the story from soup to nuts.” I don’t really know if that means a negative agenda for online poker, but I get the feeling that it might.
"That means that this story is unlikely to be a good thing for online poker on the whole. I wish that programs like 60 Minutes would always tell the whole story (ie, get PokerStars involved, explain why some sites are secure and clean, etc), but I can’t really be sure that will happen.
"If I do end up on-camera, I will be sure to explain that this scandal was online poker’s “Enron” — ie, the biggest and worst scandal in the history of the industry. It is not a commonplace occurrence and people should not take it as such.
"In terms of the “certainty” that this will get on the air… I’m not sure. I’ve been told that it’s definitely happening. But, considering that it has not been shot yet, anything is possible. And if it does end up on the air, I have no idea when that will be or what the 60 Minutes airing schedule looks like."
Several other poker writers have been approached by 60 Minutes, Tom Somach reported, observing that with another online poker cheating scandal breaking – this time the allegations against Absolute's sister poker website Ultimate Bet – it’s a sure bet the “60 Minutes” piece won’t just address the Absolute Poker situation.
Infopowa has covered the Ultimate Bet story, which appears to have gone very quiet in recent weeks.
The story about the Absolute Poker debacle, initially denied and then confirmed as an "insider issue" involving a "consultant" alleged by other sources to be one Alan John Grimaud, a Canadian citizen who disappeared from public view in the wake of the issue, is likely to make fascinating television.  It has all the elements for a penetrating expose; big money, high technology, Internet gambling, mysterious figures in the background, unresolved questions and some expert detective work by the poker-playing community.
CASINO-MATRON KEEPS 'EM GUESSING
An unexpected takeover on a suspicious date….
The notorious advent of April had members of the Casinomeister online gambling information portal on the hop this week.
When they clicked through to the popular website, owned by occasional prankster Bryan Bailey, they found a brand new lurid purple corporate identity "Casino.Matron" and the information: "I am woman – I am proud – I am in charge now."
The mission of the "new" owners was listed as "No more macho Casinomeister chauvinistic subjection. No more sexist robot – he was fired ( a reference to the webmaster's robotic alter-ego Vortran).
In previous years Bailey has amused and at times alarmed the unwary with April pranks such as pasting official-looking warnings across his website notifying online gamblers that they may be under investigation by (fake) US authorities.
CYBERSQUATTERS ARE GETTING SMARTER
Brand pirates focusing more on less visible directory tactics
The "Catchusifyoucan.com" cyber crooks have devised new techniques to avoid brand defence actions, reports the Las Vegas Business Press in an interesting article on brand piracy this week.
Intellectual property lawyer David LeGrand summed up the state of online disputes by saying that cybersquatters were getting smarter and more difficult to detect. But lawsuits over domain names are increasing, he said, although like the Internet itself, the infringers are evolving and becoming more sophisticated.
Another specialist in the field, Greenberg Traurig attorney Ron Green has been busy pursuing typosquatters, companies that own domain names that are misspellings of famous websites.
He revealed that deliberate misspellings, or name variations, are becoming more common as available domain names vanish. And while many cybersquatters are still setting up typical online casino web sites, an increasing number are now using their controversial domain names for less-visible "directories."
Money, not public service, is driving these information-driven sites, plaintiff's lawyers charge. The revenue stream for directory sites is harder to trace, and the site's purpose is not so blatantly commercial, explained John Krieger, a lawyer with the Las Vegas office of Lewis and Roca.
A directory site usually derives "click-through revenue," which is based on users clicking on linked sites and ads. "There are a lot of them," he said of directory site cases.
The passage in 1999 of the Anti-Cybersquatting Consumer Protection Act stemmed the tide of overall domain name infringements for a short time, lawyers say. However, "….it seems like in the past two years, it has been picking up again," Krieger said.
Directory websites are likely to be the next big thing in domain name disputes, said Andy Mayfield, a St. Louis-based intellectual property attorney with the law firm Armstrong Teasdale. "That really is a developing area," Mayfield said. Key to the popularity of directories is the difficulty of proving such sites are profitable, which is a needed element in proving bad faith intent.
"Is it a commercial (use) case or not?" he said. "I think it is because the revenue is based on the number of hits placed through the site."
Plaintiffs' lawyers' opinions don't always carry the day in court, however, Mayfield added. "Is it harder to prove cut-and-dried competition? Yes."
David LeGrand, a director with the Fennemore Craig law firm in Las Vegas, said he now sees fewer domain-name disputes involving pornographic and online gambling websites. "There are some of those left … but that kind of case has been chewed through," he said.
The stragglers are more unfinished business, usually involving a plaintiff selling their business or finally obtaining the financial resources to sue, the lawyer explained. "The directory sites are a lot more challenging," LeGrand added.
Constitutional issues also come into play with directory sites, explained Mark T
ratos
, an intellectual property lawyer and instructor at UNLV's William S. Boyd School of Law.
"The ability to get any relief under the law is reduced because of the First Amendment, freedom of speech," he admitted.
An emerging trend in cyberlegal battles is "typosquatting," which is also generating lawsuits.
The practice of diverting traffic to websites by slightly changing the spelling of a more famous domain name has mostly gone under the radar, LV Business Press reports. Typosquatting is typically a civil matter, but was made a crime under the Protect Act in 2000, which is more commonly known as the "Amber Alert" legislation. Typosquatting was included in that law because pornographers often changed the spelling of common domain names to divert traffic to their sites.
Tracking down all the typosquatters isn't easy, said Ron Green, an attorney with Greenberg Traurig.
"With as many domain names (as) there are registered daily, it is hard to police all of them," he said. "I think typosquatting is a big problem for anybody who has been in business for a number of years."
Domain name fights don't show any sign of going away, he said. "As long as there is money to be made on the Internet, people will take the risk."
$2.5 MILLION ONLINE MAHJONG INVESTMENT BY CRYPTOLOGIC
Another step in Internet gambling provider's move into Asia
CryptoLogic Limited continued its advance into the Asian market this week by making a strategic investment in Mahjong Time, an innovative provider of online Mahjong software and turnkey solutions.
"Mahjong is a game with an ancient history in China, and a following of well over 600 million worldwide," said Brian Hadfield, CryptoLogic's President and CEO, adding that his company is skilled in taking popular pastimes and turning them into online entertainment, and intends to continue working in Asia with partners who share that vision.
In a deal that is expected to close within the next 30 days, CryptoLogic has agreed to invest up to $2.5 million for a significant minority equity stake in Mahjong Time, subject to certain performance thresholds and milestones.
The Asian company has a patented platform created and managed by a team with in-depth Mahjong experience, and earns revenue by licensing its software to gaming operators, who attract business through tournaments, subscriptions, "pay-for-play" models and in-game advertising. Mahjong Time also earns revenue from its own site, MahjongTime.com.
Mahjong Time has a number of unique advantages for operators, claims Hadfield, including more rulesets than any other provider, multiple language versions of its software and advanced gaming features (such as play, watch and archive modes). Players benefit from a secure and robust environment featuring no-download software that supports both subscription and tournament play, as well as a practice mode that teaches the game to newcomers.
Players from 136 countries enjoy social networking through advanced community features at Mahjong Time such as an advanced avatar shop, personalisation engine, friends list, rated competitions and a patented visual "belt" rating and ranking system – all of which are keys to Web 2.0 success in gaming.
Mahjong Time is the official online partner of the North American Mahjong Federation, the European Mahjong Association and national associations in ten European countries, and has developed a unique, officially-certified rating system (MORSE) for use in online tournaments.
The company is also the exclusive online software and platform provider for the World Series of Mahjong, the biggest prize money tournament in the history of the game. Global TV coverage of the WSOM over the next three years will provide a platform to reach millions of enthusiasts across Asia and beyond.
"As a game, Mahjong is about both strategy and community, and that's the approach we have taken to building our software and our business," said William Sutjiadi, CEO of Mahjong Time. "CryptoLogic knows great innovation and great software, and together we will build a business with huge global potential."
PPA REGIONAL DIRECTOR ABANDONS GOVERNSHIP QUEST
But feisty Rousso vows to continue the fight against Washington state's draconian online gambling laws
Lee Rousso, the feisty Seattle lawyer and Poker Players Alliance regional director has abandoned his campaign to unseat Washington state governor Christine Gregoire but says he will continue his fight to overturn the state's draconian laws against online gamblers.
Rousso cites a US Supreme Court decision upholding the state's "top two" electoral system as his reason for withdrawing from the gubernatorial race.
Writing on his website at http://leeroussoforgovernor.org/ the pro-poker campaigner announced his withdrawal 'with a heavy heart and great reluctance' but emphasised that what he isn’t giving up on his legal challenge to Washington’s Internet gambling ban, which was approved by the Legislature and signed by Gregoire in 2006.
“Even though I am dropping out of the political arena, I will continue to work to change the laws so that Internet poker players can enjoy the Great American Game from the privacy of their own home,” Rousso wrote. "My constitutional challenge to the law is set for a hearing on April 25, 2008. Assuming I get my day in court (something the State is desperate to avoid), I think I have a good chance at winning.
"Meanwhile, I encourage all my supporters to continue to fight the good fight. We are going to win this battle. Maybe not today, maybe not tomorrow, but someday soon."

iMEGA APPEALS IN U.S. ONLINE GAMBLING LAW CASE
Notice of appeal filed in 3rd Circuit Court of Appeals in Philadelphia
Having achieved legal standing to litigate in its case against the US government's UIGEA earlier this year (see previous InfoPowa report) the Interactive Media Entertainment & Gaming Association (iMEGA) online gambling trade group has now filed a Notice of Appeal in the 3rd Circuit Court of Appeals (Philadelphia) to progress its challenge against "policy enforcement" of the UIGEA.
In a press announcement this week the organisation recapped on previous litigation, commenting that the prior ruling by the Honorable Mary L. Cooper contained a great deal of good and yet some bad aspects for iMEGA – and for the rights, the people and the medium it seeks to defend.
"First and foremost, the Court established, with crystal clarity, the standing (and associational
standing) of iMEGA to challenge this (UIGEA) law in court," explains the statement. "This is no small thing. Judge Cooper herself spent 15 pages of her 29-page decision establishing iMEGA’s standing, in the process knocking down the US government’s primary challenge to our suit. iMEGA flat-out beat the government on that point.
"Many legal commentators—both supporters and naysayers—from the beginning viewed the question of iMEGA’s standing as an insurmountable barrier to moving forward. Well, we’ve crossed over that barrier, and now the government has to contend with iMEGA as fully and unquestionably empowered by the Court to assert our rights in the courts of the United States. The fact that the Federal courts have now recognized iMEGA as the champion of the Internet Gambling industry cannot be overstated," the statement adds.
iMEGA recognises that it failed to obtain a definitive ruling on the "groundbreaking questions we presented, namely, that those fundamental rights we all enjoy – of privacy, speech, expression, and conduct – should not be lessened in any way when we are using the Internet."  Judge Cooper simply affirmed that Congress had the right to pass the law in a constitutional manner – a point iMEGA never challenged.
"As a result, the Court is in essence standing aside and reserving these issues to be decided by a “higher authority,” the United States Court of Appeals for the Third Circuit and, potentially, the United States Supreme Court," iMEGA claims, before emphasising that Judge Cooper acknowledged the failings of the Unlawful Internet Gambling Enforcement Act and, in Footnote 12 on Page 27 of her decision, stated categorically that the “criminal penalties” provided for under the UIGEA do not apply to “financial businesses,” such as “financial transaction providers.”
The statement clarifies that the next step for iMEGA is to continue the battle for the overthrow of the UIGEA in the Third Circuit Court of Appeals in Philadelphia, an appellate court that has been traditionally protective of the fundamental rights of speech and expression.
"One need only look to that Court’s striking down (multiple times) of the Child Online Protection Act (COPA) – another well intentioned but over-reaching Federal law – for an example of how favorable that Court can be to iMEGA’s challenge," it avers.
A positive result for iMEGA in the Third Circuit, affirming its “digital civil rights”, would represent a landmark victory with historic consequences.
iMEGA is under no illusions about the magnitude of its next battle, saying that in light of political pressures, it anticipates that the US Justice Department will bring all of its vast resources to the fight. "(But) with the possible exception of the American Banking Association, no one has more precisely and effectively portrayed how faulty the proposed UIGEA regulations are, in the hope of preventing them from being promulgated or weakened to such an extent that they become meaningless," the statement claims.
"While we were disappointed that Judge Cooper dismissed our (original) lawsuit, this case is far from over. We always knew that this would be the first round in a serious fight, as most important legal battles are. Many legal challenges that lost their first round make up many of the rights Americans now take for granted," the organisation claims, giving as examples:
Brown v. Board of Education (”Separate but Equal” school systems) – Originally lost in U.S. District Court for the District of Kansas
Miranda v. Arizona (Illegal Interrogations) – Originally lost in the Arizona Supreme Court
Gideon v. Wainwright (Right to Counsel) – Originally lost in the Florida Supreme Court and Fourteenth Judicial Circuit of Florida
Tinker v. Des Moines (Freedom of Speech) – Originally lost in U.S. District Court and the Eighth Circuit Court of Appeals.
iMEGA is also currently active on the lobbying front, and president Edward Leyden will provide detailed verbal and written testimony for the Congressional hearing on UIGEA on April 2, 2008 by the House Financial Services Committee, Subcommittee on Domestic and International Monetary Policy, Trade, and Technology.
The hearing will begin at 10 a.m. and will include testimony from representatives from the Federal Reserve System and the U.S. Department of Treasury.
Several representatives of financial institutions are also listed on the witness list, including Harriet May, who will be speaking on behalf of the Credit Union National Association; Wayne Abernathy, representing the American Bankers Association; Leigh Williams, from the Financial Services Roundtable; and Ted Teruo Kitada, on behalf of Wells Fargo & Co.
 
DUTCH SENATE TAKES A MORE CAUTIOUS APPROACH
Proposal to give state-owned Holland Casino an exclusive three year run is rejected
Dutch media reports indicate that a controversial proposal before the Dutch Senate to give an exclusive and protectionist three year online gambling license for the Netherlands to the state-owned Holland Casino.com has been rejected, suggesting a more cautious approach by Dutch legislators acutely aware of the scrutiny of the European Commission (see previous InfoPowa reports)
It is not yet known how this will impact the Internet operations of the casino, which has recently been in the throes of an extensive revamp, working with turnkey provider Cryptologic.
 
The Netherlands has been at the centre of many disputes in which gambling companies in other European Union nations sought to claim their right to the free movement of goods and services between the 27 nations in the trade bloc. State monopoly De Lotto has fought and locally won determined legal actions to exclude competition for its lucrative exclusivity and the country has been warned by the EU enforcement agency that its practices are not compliant with EU requirements.
Earlier this year a vote on the subject scheduled for the Senate was postponed by Minister of Justice Ernst Hirsch Ballin, who reasoned he was concerned that the measure would be rejected. And there have been reports that the government was also mulling the introduction of plans to prosecute Dutch banks and financial institutions that processed payments headed to online gambling sites.
The European Commission has been increasing the pressure on EU member nations with gaming monopolies to bring them into compliance with EU directives that guarantee fellow members free movement of goods and services in terms of Article 49 of the EU Treaty.
CRYPTO SAYS DUTCH VOTE WILL HAVE NO MATERIAL IMPACT (Update)
Holland Casino bid for three year online monopoly dislocated
This week's 35 – 37 vote Dutch Senate defeat of an attempt to grant the state-owned Holland Casino.com an exclusive three year license for the Netherlands will have no material affect on the casino's new software provider, Cryptologic has advised.
The bill failed to pass the upper house of the Dutch parliament after being approved by the lower house in 2006. It would have given a Holland Casino revamped by Cryptologic exclusive online gambling rights in the Netherlands.

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