Online Casino News and Information

By now most people with an interest in online gambling know about the arrest of the Neteller founders and the confiscation by the US DOJ of over $55 million of customer funds said to be in transfer through US financial institutions at the time of the arrests.

But did you know that on May 14th the Optimal Group, owners of the e-wallet FirePay, reported they are voluntarily working with the US Attorney’s Office in the Southern District of New York (which coincidentally is the same office that arrested the Neteller duo) in connection with an investigation into the online gambling industry? They revealed the US Attorney’s Office issued seizure warrants for certain company funds; approximately $4.2 million in a FirePay reserve account and about $15 million Optimal Payments has in a money market account.

Did you also know about Citadel? May 14th in NewsWire “Citadel Commerce Corp, a wholly owned subsidiary of ESI, today announced… 9.25 million Merchant Reserve Funds frozen by its processor in the USA have now been seized by the U.S. Department of Justice (DoJ). All of these funds are Merchants’ Reserves related to internet gaming except for approximately US$ 941,000 of Citadel’s own capital. The company is continuing to work with the DoJ through its legal counsel to resolve the situation.”

Several things immediately come to mind when reading these reports. First, the monies seized and being held by the US DOJ totals over $78,450,000. Second, the releases from Optimal and Citadel were the same day. Third, every report from all three companies, Neteller, Citadel and FirePay, clearly states that the companies are voluntarily working with the DOJ. These companies represent the three largest e-wallets operating on the web today. Correction: three largest e-wallets that were operating on the web when the DOJ made the Neteller arrests. If a person was gambling online, in all probability they were using one of these three e-wallets to fund their accounts. I know if someone had seized a couple million dollars of my money, I’d cooperate too. But to what extent are these companies cooperating? The reports from Citadel and Optimal prove the US DOJ is still moving on these charges and does not appear to be slowing down.

The US DOJ is definitely on a mission, over zealous and a little out of control. The question is, is that mission based on facts and law or beliefs and morals. I believe they will continue on this mission until they are challenged by a court of law. The longer they can put off that day of reckoning, the better their odds. The longer they can intimidate, the less likely they will be challenged. They are currently under fire for overstepping their boundaries with the Patriot Act and the firing of US Attorneys. But no one seems to want to challenge them on this and the American people are very reluctant to become actively involved. They’d rather someone else do it.

We need a hero, but I’m afraid they are a scarce commodity these days. By now, I’m sure whatever heroes are left in the world are a little tired of sticking their necks out just to get thrown under the bus. I have heard though that David Carruthers, ex-CEO of BetOnSports, may be applying for the position.

There’s a great article at Covers.com that discusses the battle David Carruthers, ex CEO of BetOnSports, is preparing for in a US court of law. Games and Casino reported earlier this week that Carruthers had sent a letter to BoS advisors and politicians asking the UK for help.

“…Carruthers is the former CEO of U.K.-based sportsbook, BetonSports.com. He was arrested last July in Fort Worth… charged with numerous offenses related to the operation of the company.”

“…in a letter sent to former advisors of BetonSports, Carruthers asked his allies to lobby the U.K. government for support in his case. He also accused the U.S. government of actions that have “destroyed businesses, free competition and lives” and disclosed that he will use a recent World Trade Organization (WTO) ruling as a part of his defense.

“In a ruling on Feb. 15, 2007, a WTO panel found the U.S. in violation of international trade agreements and “was acting inconsistently with its obligations under … the GATS (Global Agreement on Trade in Service).” The panel also found that the U.S. defense of “public morality” did not apply because American laws allow other forms of Internet betting, such as horse racing and lottery betting.” “…The U.S. did not amend its domestic laws … Instead they claimed they never meant for Internet gambling to be included…”

“In his letter Carruthers wrote, “The U.S. decision to arrest me not only shut down BetonSports, but the actions by the U.S. government have destroyed nearly all the public online gaming companies in the U.K.”

“Based on what the WTO has now called a treaty violation, more than $10 billion in equity of U.K.-listed companies were wiped away. Three U.K.-listed gaming companies have closed completely and other U.K. citizens have been arrested as well, victims of a policy that the WTO has now determined as unfair and violates their treaties.”

“This case could become one of the most significant in the long history of legal wrangling between the U.S. government and the online gambling industry.”

“…The Missouri judge presiding over Carruthers’ case decided that the WTO decision would be permissible as grounds for the dismissal of the indictments against Carruthers.”

Carruthers has always spoken of the need for online gambling to be regulated, licensed and taxed, and insists the US should give legitimacy to an industry that does not deserve the bastard label the government supports and enforces.

Gary Kaplan, founder of BetOnSports had his day in court Tuesday, at least one of them. On May 15, 2007 he pled not guilty to racketeering and conspiracy charges related to the British online gambling company’s allegedly illegal acceptance of bets from the U.S.

The New York Post reports that Kaplan, 48, entered his plea before U.S. Magistrate Mary Ann Medler in St. Louis federal court, 10 months after U.S. prosecutors unsealed an indictment against him. He was apprehended in the Dominican Republic in March.

“You understand the nature of the charges? I can’t read them all,” Medler asked Kaplan of the 20-count indictment. “Yes,” Kaplan responded.

Prosecutors claimed London-based BetonSports and Kaplan, along with former CEO David Carruthers and nine other defendants, violated U.S. laws against Internet gambling. They’re demanding the company forfeit $4.5 billion.

The US claims that Internet gambling, a $12 billion industry, violates federal laws against placing bets using a telephone or electronic means over state lines and bases their case on that premise.

I know this is going to come as a big surprise but the court case for the two Neteller founders Lawrence and Lefebvre has been rescheduled again. The two men were arrested in January on charges which included money laundering and promoting illegal gambling. This will be the 5th court date and 4th continuance granted in this case. I erroneously reported it was the 4th continuance last month.

Attempts to follow this case and get accurate information has proven to be educational. For example yesterday the magistrate didn’t call up the cases on the May 16th court docket until after 5:00 pm. The judges, clerks, recorders, etc are there until every case is heard, no matter how long it takes. This is why information is usually reported next day.

The case was adjourned until May 30, 2007 by Judge Henry Pittman. I don’t know if the fact that it wasn’t scheduled out another 30 days is encouraging or not. Maybe it’s a sign that the court is getting tired of continuances. Then again, maybe it’s the only open date available. So we wait.

Just in from eGaming Review are reports that “David Carruthers, ex-chief executive of BetonSports, has sent a letter asking for individuals at the company’s former advisers to lobby the UK government, the EU and UK and European Members of Parliament on his behalf as part of his attempts to use the recent WTO decision as part of his defence. In the letter, Carruthers asks the recipients – including it is believed individuals at BetonSports’ brokers Evolution and auditors Baker Tilly – to write to Charlie McCreevy, European commissioner for internal market services at the European Commission, and Peter Mandelson, European commissioner for external trade, as well as UK and European Members of Parliament.”

“The news of the letter emerged… after the US authorities in Utah unveiled further indictments against US-facing online gambling interests including those behind payment processing companies Gateway Technologies and CurrenC… same week as BetonSports plc is due to announce its formal insolvency arrangement.”

“Carruthers accuses the US government of actions which have “destroyed businesses, free competition and lives”. The letter adds that “now more than ever it is important to get heard” and that it is “critical to communicate and ensure that (the) impact and importance of this WTO decision are not lost to silence and inaction”. Carruthers says the WTO decision has “extraordinary implications for my life” and adds that the issue “goes beyond my personal circumstances”.” “The US decision to arrest me not only shut down BetonSports, but the actions by the US government have destroyed nearly all the public online gaming companies in the UK. Based on what the WTO has now called a treaty violation, more than US$10bn in equity of UK-listed companies were wiped away. Three UK listed gaming companies have closed completely and other UK citizens have been arrested as well, victims of a policy that the WTO has now determined as unfair and violates their treaties.”

Still held under house arrest in a St. Louis Hotel, Carruthers was taken into custody and arrested last July on charges of racketeering and wire fraud by the US authorities

The Financial Mirror reports that for the first time ever in Q1 2007 now ended, bwin Interactive Entertainment AG has won the title they’ve been seeking since 2004. They are now officially the ‘Worlds’ Biggest Publicly Listed Online Gaming Provider’, speaking in terms of both the number of active customers and gross and net gaming revenues.

“At the same time the reorientation of the company’s strategy announced two quarters ago has been successfully implemented, and significantly better results reported… The decline in new active customers and less effective churn management by comparison were attributable mainly to a drastic reduction in the marketing budget.”

It was also reported that in the short term, the company could face weaknesses in the activation of customers and less dynamic growth of new customers. Apart from this, at the beginning of March 2007 the company also temporarily suspended its online gaming products in Turkey.

For all the numbers and quarterly comparisons read the complete article at Financial Mirror

Google has submitted a patent request (US and Europe) for a new program that compiles psych profiles of online ‘gamers’. The thought behind the program is that a player’s in-game behavior provides insight into that player’s personality type. Traits like honest or dishonest, passive or aggressive and includes their personal preferences. This program would then help advertisers target players more effectively.

The program would work especially well when targeting games like World of Warcraft and Second Life, since player behavior on these types of games usually mirror their real life behavior. Gamers using consoles, such as the PS3, Wii and Xbox 360, which connect to the Internet could also be monitored.

This patent application has raised concerns amongst privacy advocates, including Dale Clapperton, the Chairman of Electronic Frontiers Australia. Clapperton is concerned that the psychological profiles might be used for purposes other than marketing.

According to an article in Tech.Blorge this patent application has raised concerns amongst privacy advocates, including Dale Clapperton, the Chairman of Electronic Frontiers Australia who is concerned that the psychological profiles might be used for purposes other than marketing. “Google is a US company and subject to the laws of the United States. If those laws say that they have to give the United States law enforcement agencies full and unfettered access to these detailed profiles that are being built up of all these people playing these games, then Google as a good corporate citizen would comply with the laws in that respect,” Clapperton told Australia’s ABC radio. “Who knows, we may end up in a situation where the police come around and knock on your door because you’re World of Warcraft character has been going on a bit of a killing spree lately.”

The Register reports that apparently Google has no plans to launch the profiling program, and that it was just one of many patents that had been applied for in recent months. “Google registers different patents irrespective of whether we actually intend to use them,” the spokesperson said.

It all comes down to who you’d rather hold a patent on this type of program… Google, who if the asked by the government to have access will give them anything they like including the key to the executive bathroom or another type of company, like say The Enquirer who gives everybody access to the info with shocking actual photos in full color on the front of the paper and a cardboard cut-out CD in special issues. Hmmm lemme think… does the CD come with those punch-out 3-D color glasses as well?

Czech Business carried an interview with Bwin Interactive regarding the Czech government’s stance on online gaming and Bwin’s successful European operations. “Foreign online gambling companies are betting they’re onto a Czech business jackpot because government officials will never be able to stop their Internet activities run from abroad. Austria-based bwin Interactive Entertainment AG is one enterprise benefiting from laws that have only served to block competition from domestic entities. Company attorney Jindøich Rajchl teases that if Web-based betting was legalized here, bwin would be the first to apply for a license… “

“Czechs gambled some Kč 3.5 billion (€ 124.04 million) through Bwin last year… The frustration generated by the situation–contrasting with that of the United States where public morality laws have largely kept out foreign online betting firms while allowing some American companies to do business–in March led the Office for Protection of Economic Competition (ÚOHS) to say it may challenge the state over the discrimination…”

Bwin has run their Czech Web site since 2002 offering sports betting, poker, casino, java games, table tennis and golf options. Bwin is confident Czech Internet gambling law will remain subordinate to the European courts’ line on the issue.

Poker Players Alliance recently hired Alphonse D’Amato to act as their spokesman for the PPA. In an article by former Senator D’Amato and carried by the Boston Herald, he discusses government’s biggest blunders, self-serving politicians and outrageous legislation; all of which apply to the UIGEA.

“Perhaps the biggest government blunders in U.S. history have been prohibitions.

The prohibition against alcohol led to black market smuggling and speakeasies, and reaped huge profits for organized crime. Today, the prohibition on Internet gambling promises to funnel players underground, diminishing society’s ability to deal with serious challenges such as underage and problem gambling, and, more importantly, interferes with the right to individual liberty and privacy.

Rep. Barney Frank’s (D-Mass.) efforts to deal with this outrageous legislation are heroic.

With the current Internet gambling ban, the unintended consequences abound. Law enforcement and financial institutions must redirect resources to monitor and then block poker wagers instead of focusing resources on tracking terrorist financing. And, because the ban funnels players underground and forces them to use less transparent financial systems to place bets, law enforcement finds itself even more hampered to police potential money laundering…”

Senator D’Amaot goes on to list other consequences such as the shutting out of reputable sites that use age-verification software while underground sites won’t and don’t carry the burden of fair and responsible gambling.

Read the complete article in the Boston Herald

CasinoGamblingWeb announced recently they have a new goal. Information on their website says ‘On behalf of advice given to us by aids to both Shelley Berkley and Barney Frank the goal of the Repeal the Unlawful Internet Gambling Enforcement Act Petition has been changed from 400,000 signatures to just 10,000….

…aid to Shelley Berkley has told us she will gladly accept a meeting with us in order to read over the Internet gambling petition we have started, which today has more than 3,700 signatures. Once the legitimate amount of signatures reaches 10,000 a representative from Casino Gambling Web will head to Washington D.C. to meet with Shelley Berkley and also with Barney Frank…

“… lost steam following the announcement of two bills being introduced to congress, neither of which express a desire to repeal the UIGEA.”

“We need to get the petition to the 10,000 mark in order to have the representatives take it seriously,” said Gordon Price, CEO of Casino Gambling Web. “You don’t have to believe it will make a difference to sign it, you just have to believe in what it says.”

The Poker Player Alliance has just sent out an email to their 500,000 members encouraging them to write their congressmen to express their support for the Barney Frank bill that would make online gambling legal, however, the Frank Bill has very little co-sponsors and it has very low chances of passing.