Online Casino News and Information

The news out of Las Vegas, according to the Las Vegas Sun, is that charges have been brought against 7 people and 4 companies who stand accused of processing payments for illegal internet gambling.

According to the indictment, the 7 defendants live in Las Vegas and 2 of the 4 companies are based out of Salt Lake City. At a press conference US Attorney Brett Tolman said “We now have a body of information technology and strategy that can cross many jurisdictions”

While people who gamble online are basically exempted from criminal charges and some exemptions were carved out for horseracing, Tolman indicated companies are prohibited from processing online bets

“…indictment claims banks issuing Visa and MasterCard credit cards were fooled into processing Internet gambling charges. Defendants also channeled Western Union wire transfers through the Philippines.” The 34-count indictment includes charges of racketeering conspiracy, bank fraud, transmission of wagers and money laundering.

Among other things, the seven defendants are accused of “creating three companies to conduct fraudulent credit card and wire transfers for their clients - online gaming sites based outside the U.S., the indictment said.”

“An investigation is ongoing to determine if employees at the Utah businesses were aware they were involved in criminal activity and therefore could also face charges, he said. “There are layers of facade that have to be pulled back and uncovered,” Tolman said.”

“… BetUS.com, BetOnSports and four other unnamed gambling Web sites are mentioned in the indictment as doing business with the defendants and their companies. In March, the founder of BetOnSports, Stephen Kaplan, was arrested in the Dominican Republic. He and chief executive David Carruthers are facing federal charges of felony racketeering and fraud in St. Louis.”

“The indictment seeks to recover $150 million from the defendants as well as real estate, vehicles and other assets under RICO… None of the defendants is in custody, but all are scheduled to appear in U.S. District Court in Salt Lake City on May 30.”

Mortreal-based online payment processor Optimal Group Inc (Firepay) reports they are cooperating with an information request from the U.S. Attorney’s Office in the Southern District of New York in connection with an ongoing investigation of the internet gambling industry. Optimal Group Inc also stated the US Attorney’s Office issued seizure warrants for certain company funds.

The company stated they were cooperating with the voluntary request for information and they have been assured the warrants don’t affect the company’s current ongoing discussions with the DOJ. The warrants were issued against approximately $4.2 million that Optimal’s FirePay Ltd. affiliate has on deposit in a reserve account and about $15 million Optimal Payments has on deposit in a money market account.

Optimal Group issued a statement in October saying the passage of UIGEA would significantly hurt its business, specifically FirePay, which processed payments for online gambling sites.

Reaction to the news sent Optimal shares diving 9.5% to $7.97 in morning trading. Optimal group has seen its stock decline from $15.58 this time last year.

Source: Houston Chronicle

Shanghai Daily reported the investigation and arrest of an online casino in which 5 shareholders of the company and 11 senior members were arrested. All together Police seized 4 billion yuan (US$519 million) in bets during a raid in neighboring Jiangsu Province and arrested 37 members of the gang behind it

According to the report, the Public Security Bureau of Yangzhou City, Jiangsu Province, found a netizen who was identified as Chen frequently logged on 13 overseas gambling Websites via different usernames or accounts in mid June last year. Police officers also noticed that the total odds betting via different accounts had reached 4 billion yuan since last January. Yangzhou police filed an investigation on June 30 and got evidence from Chen’s laptop computer, including weekly financial reports for betting and gains.

Chen confessed that he worked for the company from last March and he had made statistics every week on betting odds and calculated the final profit via Microsoft Excel before reporting to two seniors of the company.

The case caught the eye of the Ministry of Public Security, which then ordered Jiangsu police to take charge of the case. Under orders of the Ministry and in cooperation with police in South China’s Guangzhou City, on Sept 13 the Jiangsu police captured all five shareholders and seven senior agents as well as 11 senior members.

Police investigations culminated in this latest raid in which police uncovered the top level of the gambling pyramid which consisted of 26 agents as well as 21 senior members.

The American Gaming Association reports that according to their survey, gambling revenues at commercial casinos within the US rose a record breaking 6.8% culminating in a $32.4 billion dollar year for 2006.

These numbers do not include revenues from American Indian casinos, which is no small amount of change either. Some Indian casinos are reported to have exceeded many Las Vegas commercial casinos.

The list of what wasn’t included are gambling revenues from 372 American Indian casinos in 28 states, 713 card rooms in five states or 11,567 video lottery terminal locations in six states.

Frank Fahrenkopf, President of AGA, said the addition of slots to racetracks is spawning a “revival” of the horse racing industry in some states. The survey found racinos accounted for $1.4 billion in taxes to state and local governments.

Poker continues to rise in popularity though the survey indicated it may be in a period of slow down. Fahrenkpot also said the number of poker players playing in brick and mortar casinos hasn’t been affected by UIGEA. Don’t see why it would have.

The AGA originally backed the UIGEA but Fahrenkopf said it has switched positions and now supports legislation calling for a study of the issue.

Adam Green and Anthony Giovaniello, both from New York, were arrested along with 16 other people in connection with an 18 month investigation into illegal sports betting and charged with Enterprise Corruption and various other crimes relating to narcotic drugs and firearms.

Authorities believe the gambling operation handled approximately two million dollars a week and serviced more than 800 individual bettors using a wire room concept which in this case was located off shore in Costa Rica..

Forty four search warrants were executed; over one million dollars in cash seized, 15 vehicles and 2 illegal handguns were confiscated along with computers, cell phones and other evidence.

Investigators claim the operation worked through approximately 60 related websites, such as www.betoss.com, www.wagerweb.com, www.pacificsportsbook.com, and www.betasb.com.

These types of mafia gambling crime rings have done away with traditional set-ups and make use of modern technology such as toll free phones and the internet to build and maintain their operation.

eCommerce and Online Gambling Regulation and Assurance group has been working to produce a stringent fairness testing of online casino and poker sites and announced it is now available to operators wishing to validate their site. The testing and certification process includes monthly poker card shuffling reviews and payout percentage reports on all games as well as bi-annual reports on blackjack, video poker and roulette.

Over 130 top online casinos and poker rooms are expected to make these reports available via their websites. Andrew Beveridge, the CEO of eCOGRA said. “These dedicated resources will allow us greater flexibility to meet the dynamic demands of the industry, but more importantly the requirement for safe and fair gaming from the player community.”

Neteller issued a press release announcing its new suite of prepaid, re-loadable debit and remittance cards for its customers in Europe and Asia Pacific. Customers in Canada, US and Turkey can not take advantage of Neteller services due to current federal legislation.

Their new prepaid card is tied to a customer’s Neteller account and can be used at over 24 million ATMs and Point-of-Sale (PoS) terminals worldwide. This card replaces the existing Neteller debit card and has several benefits not available on its predecessor such as more flexibility and significantly lower pricing. The new card will be available in multiple currencies and is tied to the customer’s e-wallet account, saving the consumer foreign exchange fees. The Group expects the new prepaid card to be available to customers by the end of May 2007.

Co founders of another payment processor, E-Gold, were indicted last week for allegedly ‘allowing the service to be used by criminals engaged in financial scams and child pornography’ according to the Washington Post who reported on the indictments

The indictment names the company’s co-founders — Douglas L. Jackson, of Satellite Beach, Fla., and Barry K. Downey, of Woodbine, Md., as well as Reid A. Jackson, of Melbourne, Fla. and charges them with conspiracy, money laundering and operating an unlicensed money transfer business.

The company is incorporated in Nevis, which is situated in the Caribbean but the company maintains offices in Melbourne Florida as well.

James Finch of the FBI’s Cyber Division stated “The advent of new electronic currency systems increases the risk that criminals, and possibly terrorists, will exploit these systems to launder money and transfer funds globally to avoid law enforcement scrutiny and circumvent banking regulations and reporting,” .

Following a 2.5 year investigation by the FBI, US Secret Service and the IRS, the government charged E-Gold and its parent, Gold & Silver Exchange, with operating an unlicensed money transmitting business under federal law and one count of money transmission without a license under D.C. law.

Please read the complete article at Washington Post

UC Group and Baker Tilly believe they have the software and technology to perfectly compliment Rep. Barney Franks new legislation for internet gambling. Their product allows the user to pinpoint the age and location of bettors and detect compulsive gambling and money laundering. The software is already operating in systems around the world according to a company spokesman.

the Hill reports that the 2 companies teamed up to launch the “Safe and Secure Internet Gambling Initiative”. The companies already provide back-office and payments services to internet businesses all over the globe and believing in their product, have hired the lobbying firm Alston & Bird LLP to promote their services to lawmakers in Washington. Alston & Bird has approximately 7000 clients in the UK and more tan $2 billion in revenues. Alston & Bird has also contracted Downey McGrath Group, another lobbying firm, to help in this effort.

Jeff Sandman of Hyde Park Communications is the initiatives spokesperson and says of the effort “The [Safe and Secure Internet Gambling] Initiative is both to educate parts of the public as well as to garner grassroots support from other companies, organizations and individuals for the legislation,” “UC Group and Baker Tilly envision a “comprehensive grassroots effort” in support of the regulatory regime,” he said. You can visit the companies new website at www.safeandsecureig.com.

On Friday, April 4, 2007, the US announced its decision to ‘modify’ the commitment made in 1993 to open U.S. markets to “recreational services.” and clarify that gambling services are not included. This unprecedented action would remove any WTO jurisdiction to online gaming and nullify Antigua’s recent WTO court victory.

Response to this newest US decision, good or bad, has been reported from several countries outside the US but there has been no comments from the US political arena. Not one.

What does Senator Obama feel about this latest US abuse of power? Or Senator Clinton? Nothing yet from the office of Senator Kyl either although I imagine his stance would be in favor of whatever it takes to ‘git er done’ no matter what the implications of those actions might be. Will Senator Boxer be just as incensed at the abuse of power by the Bush administration in this contest as she was with White House initiated firings of 8 U.S. Attorneys? Unsurprisingly, there has been no comment from Peter Allgeier, the United States Ambassador to the World Trade Organization either.

The combination of actions against online gambling taken by the US government over the last year begs the question… How did online gambling get such a stigma that no abuse of power is too great, no violation or loss of rights as a citizen is contested, and persecution is not only tolerated but encouraged? I don’t have a satisfactory answer. Yet.

Staff Writer