By Charles Jay

More evidence that when it comes to the freedom to play, politicians are no better than the underworld figures they’ve watched on The Sopranos:

The Boston Globe reports that a bill to legalize three land-based casinos in the state of Massachusetts, introduced by Governor Deval Patrick, contains a provision attached that would criminalize placing bets online, to the tune of two years on prison and a $25,000 fine.

Naturally, it is an attempt to thwart any and all competition to the land-based operations, which will generate money for the state in the form of taxes. This time, however, it is not the operator that is targeted, it is the citizen, who is partaking of a pastime in the privacy of his or her own home. Aside from the concerns about invasion of privacy, there is the ambiguity in the moral message sent by such a piece of legislation. Barney Frank, the Massachusetts congressman who is looking to get a bill passed that will regulate the online gambling industry instead of outlawing it, took obvious exception to Patrick’s actions.

“Why is gambling in a casino OK and gambling on the Internet is not?” said Frank, who endorsed Patrick’s gubernatorial candidacy. “He’s making a big mistake. He’s giving opponents an argument against him.”

Of course he is. When you attach criminal penalties for an activity that is otherwise legal in the state, what you are essentially saying is, “Either pay us for the ‘privilege’ or go to jail.” If that is not strongarming, what is?

“If you were cynical about it, you’d think that they’re trying to set up a monopoly for the casinos,” said David G. Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas.

You don’t have to be that cynical.

Skeptics have panned Patrick’s casino plan, claiming that it won’t come anywhere near fulfilling the promises the governor made about the impact it would have on lowering property taxes in the Bay State. But it may go farther than that. Patrick has been governor only a year and yet there is plenty of scandal already swirling around his office. To begin with, critics jumped on Patrick’s membership on the board of Ameriquest, which has been accused of predatory lending practices. And there is ample controversy surrounding Patrick’s involvement with reportedly nefarious activities of Coca-Cola.

And state Rep. Paul Loscocco, a Republican, is trying to get a bill passed in the Massachusetts legislature that would require political donors to disclose whether they have connections to a casino - financial or otherwise. Yes, it sounds like an invasion of privacy, but one that might turn over a few rocks and make the governor look bad in the process.

By Charles Jay

On Wednesday, about 100 members of the Poker Players Alliance visited the nation’s capital in order to lobby for legislation that would allow their game to wiggle itself free from the Unlawful Internet Gambling Enforcement Act (UIGEA). It was a great demonstration of solidarity and organization on the part of the PPA. Some of the “name” players in poker, a galaxy of stars that has become somewhat glutted, lent their support.

These people were making themselves heard. That’s what really needs to happen. Now legislators, many of whom recognize the self-serving a certain sleazy Senator from Tennessee pushed this anti-gaming bill through as a rider onto another, unrelated bill, without any deliberation, understand better that it may have been a political mistake to jump aboard without any thought. I mean, what do they think, the people who play poker are aliens from outer space, confined to some distant colony? They are everyday folks, like me and you, and they run the gamut of all geographic and demographic groups.

Plenty of issues were brought up at this pow-wow, including economic protectionism (related to the WTO/Antigua decision), games of skill vs. games of chance, and freedom of choice. And much of it was in the interest of promoting Congressman Barney Frank’s proposed bill that would, in effect, allow U.S. citizens to play poker online without any problems.

The conflict, of course, is that at the same time there was discussion about keeping the government out of the lives of poker players, there is a concession that would allow them to get involved deeper. I have already talked about the perils involved where the government can have access to all of your financial information and history of play, which could be on the table (pardon the pun) with Frank’s bill.

Also, the government is ultimately going to limit the player’s options within the poker community itself. That’s because it would be in control of the companies who could actually operate. Radley Balko, a senior editor of Reason magazine who was present at the event, made some observations along those lines. “We will see the government picking winners and losers when it starts handing out these contracts,” he said. Obviously he has concerns about the kind of political games the U.S. Government could play when it comes to who is able to conduct business if Frank’s legislation should ever pass.

I am concerned too. Rest assured there is going to be quite a bit of political game-playing, with the system wide open for the kind of maneuvering that is a by-product of who is or isn’t going to contribute to somebody’s political campaign, or who will or will not fund the lobbying groups that push for the legislation, whoever they may be.
 

By Charles Jay

The U.S. Government wants the case brought by iMEGA to be thrown out of court. The organization was seeking temporary restraining order (TRO) against the implementation of the Unlawful Internet Gambling Enforcement Act (UIGEA), the anti-gambling law that was passed last October. We referred to the suit in a previous post, if you recall. If you don’t, click here.

This law is almost a year old, and there have yet to be any enforcement guidelines set up for it. The Department of Justice filed a brief trying to get the case thrown out, coming in just under the deadline. Their assertion was that iMEGA, as an organization, has no sufficient standing to file for the TRO.

The DOJ also claimed that iMEGA was engaging in too much speculation as to what the effects of the law were going to be, which was premature, because no implementations have been put into effect. This was supposed to be done by July 20.

In other words, the Department of Justice is trying to use its own ineptitude to a kind of perverse advantage. I’d wonder why they have gone ahead with arresting operators and intimidating media outlets who carry gambling-related ads, if they don’t even now at this point what kind of activity is going to be actionable, and to what extent.

One thing I worth pondering is whether there are a whole bunch of people on Capitol Hill at this time wondering why they let people like Bill Frist rush this thing through and rope them into something that may in fact not only be unconstitutional but also have no hope whatsoever of being properly enforced. The question is, when will somebody from the moral conservative right step forward and admit it to the rest of the country?

By Charles Jay

In 2005, presumably in order to establish a connection between Stanley Ho and Nevada that did not, in legal terms, exist before, Mel Molnick placed a number of bets with Ho’s websites, with the full knowledge of officials of the Nevada Gaming Commission. Think about it - they didn’t show up by accident. This guy must have called them, explained his situation and his greater objective, and had them present while he was making these wagers. He was out to get them. He was OUT TO GET businessmen he had actually licensed his “patent” to. In fact, he appears to have granted “exclusive” licenses to more than one entity, then took actions to sabotage these business associates on the basis that what they were doing was “illegal,” even though he should have reasonably known these companies were servicing U.S. customers.

Molnick also sandbagged a slew of other people he did business with. All of this appears to be unethical, and brings into question, at least as far as I am concerned, the true legitimacy of his patent. Funny thing is, by making those wagers, he was, according to the previously referenced online piece, in violation of the Federal Wire Act. that the Nevada Gaming Commission sanctioned and approved his actions means, as far as I can tell, nothing on a federal level. This is what tells me there may well have been some federal cooperation with Molnick and his cohorts virtually from the beginning.

If the online gambling industry was completely shut down, would not Molnick’s “patent” be worthless? That’s why his whole vindictive involvement in this thing seems very, very dubious, as if he was planted into this situation for the express purpose of entrapping people.

We’ll see.

By Charles Jay

If you don’t mind, I’d like to get back to Mel Molnick for a moment.

I was digging around the other day and found this story from the Las Vegas Sun in May of 2002. It was interesting - a judge named Larry Hicks had just denied Molnick an injunction he was seeking to shut down the websites owned by Stanley Ho, the gambling impresario from Macau.

At the time, Hicks found that Ho’s online gaming company, Caribbean Online Ltd., had no real connection to the state of Nevada, and therefore his court really didn’t have any jurisdiction in the case.

Molnick stated to the reporter that it the judge’s decision was not unexpected, but then he said something that may offer a keen insight into what his true motivations were then, and are now.

Let me preface this by saying that if you have gone through the trouble of “inventing” something for the gaming industry, whatever it is, then applying for a patent on it, one would think you are trying to create something to facilitate the industry. In other words, you are “friend,” no “foe.”

Well, this was one of Molnick’s quotes to reporter David Strow:

 ”We’re only disappointed they’ll be able to continue taking wagers in the United States, and let a lot of people continue doing an illegal activity.”

I don’t know about you, but to me that sounds like a very peculiar thing for someone who at any time was seeking a connection to the industry, and wanted it to exist, to say. Why would he have developed ANYTHING in furtherance of the notion of online gambling if he was going to vilify it?

Unless the whole thing was a ruse.

Why do I say that? We’ll cover it in the next post.

By Charles Jay 

It has been pointed out that it was not really Mel Molnick who sued Bodog and won a judgment. It was someone named Dr. Scott Lewis.

The consensus among most people seems to be that Molnick is really behind the litigation, although I understand Lewis may have a separate patent. At any rate, although he has sued numerous internet gambling operators, Molnick’s name does not appear among the plaintiffs in the Bodog suit. One website, MelMolnick.com, seems to have been specifically designed to irritate him. It poses the following:

Mel Molnick takes out Bodog domain names!
Evil domain hijacker or a U.S. Government plot?

Hmmm. That’s six of one, half dozen of the other.

Obviously, that website was not built by Molnick himself (it carries a private registration). And strangely, no website seems to exist for either Molnick’s Home Gambling Network or Lewis’ 1st Technology LLC, leading me to believe these entities may have been created for the express purpose of creating the impression they were going to operate their respective patents but just want to exist on litigation. Maybe I’m just not searching correctly, but for someone who is referred to as a “multimedia pioneer” in his company’s press materials, there is very little in the way of references to Lewis on the internet. One blogger even did a Google Scholar Search, because the claim was that Lewis had a PhD in “adaptive digital signal processing” from Oxford, but he couldn’t find anything. And I don’t know that Lewis has answered any questions from the media.

Meanwhile, one published report asserts that Bodog was not served properly; that in fact the company that was served with the papers from 1st Technology was merely one with which Bodog had paid to hold some domains, and was not part of its corporate group.

Obviously there is going to be some conflicting stuff to sort through, because everything is so confusing.

 By Charles Jay 

No, I am not an attorney. But I spent over 20 years in and around the boxing business, which I think enables me to spot a naked opportunist when I see one (a “scam artist” might be too strong a word, though we reserve the right to use it later).

No, I do not think Mel Molnick invented internet gambling. No, I do not think he has a legitimate patent on anything that reaches beyond perhaps some variation on live webcam dealing, which is of a narrow scope. No, I don’t think he could stand up to a serious challenge.

But he didn’t get a serious challenge from Bodog, which lost a $46.9 million judgment, in addition to its principal domain name, as was ruled by a U.S. District Court. Bodog just didn’t show up, primarily because the anti-gambling law that Senator Bill Frist snuck through at the last minute of the last term, in the sneakiest of fashions, underneath the Safe Port Act, has made it a risky proposition (if you pardon the pun) for those operating online gambling business legitimately licensed in other countries to enter this country.

In effect, the court took advantage of a shady law, passed under shady circumstances, to give someone a license to steal something that another entity spent lots of time and lots of money to develop - a brand.

Mel Molnick did not spend one minute or one dollar developing anything Bodog used to build its operation.

Is there “justice” in that equation?

I’m going to examine that further in the next post.

By Charles Jay

David Stern is concerned about the Tim Donaghy scandal destroying the “sacred trust” between the NBA and its fans.

I don’t know that any “sacred trust” ever existed, but it’s not likely to get much better for Stern or his colleagues, as Donaghy, who copped a plea in federal court, is expected to implicate as many as 20 other referees in some form of gambling activity - not necessarily on basketball games, but other things. As we discussed here not long ago, Donaghy obviously fixed those games he was involved in, otherwise there would be very little point in betting on them. If some of the other officials were laying down wagers on the NBA, there could be exponentially more rigged contests we still don’t know about.

Henry Hill, who orchestrated the Boston College fixes in the late 1970’s, thinks it’s “the tip of the iceberg.”

“This guy is facing twenty-four years, dude, and he’s going to sing like a f***ing bird,” he says. “You watch. You got him cold. He just took a plea.”

Underworld figures have been involved in some of these scandals, as was the case with Hill. But you can already tell that for the sake of damage control, that is where the NBA would like to place the bulk of the blame. Others who have been around sports, who have their own legacies to protect, have come forward to be apologists for their own respective institutions while at the same time demonizing the “mob element.”

“I don’t think there’s anything you could bring on that would be more serious than the marriage of big-time sports and mobsters,” former baseball commissioner Fay Vincent told USA Today. “That’s the perfect storm. That’s the nightmare.”

No, that’s denial.

What needs to perhaps stop happening is for the gatekeepers of sports to stop directing the blame at the abstract of “Organized crime” and start to look at what really brings this kind of thing about - simple greed. With that, one has to look at character and credibility.

Gee, maybe it’s the structure of the system that needs examination - a system that produces the kind of individual who might be suspect in a scandal that threatens the integrity of a profession. The culture around that profession may not be surrounded by gambling, but it is stained by a certain mindset that can lead to mindlessness.

Officials in the NBA have to come from somewhere, don’t they? Well, the fact is, a referee climbs up the ladder, from doing rec league games to high schools to junior colleges to Division III to Division II to the small conferences in Division I and eventually the bigger schools. Then it’s the NBA or a stop at a minor league first. Granted, the officials can not be out-and-out incompetent. But there are other factors that go into career advancement.

Critical to that advancement is an official’s participation in clinics and seminars that are given throughout the year. My understanding is that these functions, which can get expensive, are somewhat unnecessary for any competent official, but they are run by the supervisory people at every level of play, who make a tidy profit on every event. It is an unwritten rule that few aspirants will get promoted up the ranks if they do not attend. So it is not enough to do an outstanding job during the games themselves; an official must literally pay “tribute” by kicking to the guys upstairs. That’s predatory. And it fosters a culture of corruption.

From the beginning, referees learn that there are shortcuts, payoffs and politics that often supersede merit when it comes to making it to the top. Do you think that kind of atmosphere is going to produce a steady stream of squeaky-clean officials, think again.

Just another example of an institution, whether it be in college or pro sports, that looks externally for the genesis of its problems when the wrongs perpetrated internally are more instrumental in the occurrence of malfeasance.

By Charles Jay 

The more and more I talk to people during this political season, the more I have come to the understanding that gambling emerges as an issue that clearly illustrates the difference between those who are truly advocates for unfettered personal liberty and those who think liberty is acceptable only on a limited basis (i.e., just for them).

What it also does is filter out both the moral conservatives and the social liberals.

Certainly the moral conservatives are easy enough to explain, because they feel righteously about something and wish to impose this morality - whether it is genuine or phony - upon others.

But there is a righteousness in the social liberal point of view as well; one that brings out the “nanny” instincts most of them possess. They apparently feel a lot of people aren’t smart enough to make a decision about whether to gamble or not. And particularly as it applies to state-sanctioned gambling like the lottery, they consistently refer to it as a “regressive tax.” This is obviously a foolish notion, since no one forces anyone to gamble, while the imposition of taxes can be interpreted as an initiation of force.

Actually, if there is any tax that is regressive, it is the outrageous tax on cigarettes, which disproportionately affects low-income groups. But of course, there is a strong element of personal choice in that kind of consumption, and in fact, all types of consumption.

There is a big difference between social liberals and social libertarians (small “L” there, please). I thought my political idol, Barry Goldwater, fell into the latter category. And for the most part, he did. That’s why I was disappointed to read in Lee Edwards’ biography of the former U.S. Senator that while he was involved as a member of the Phoenix City Council, Goldwater lobbied strongly against the legalization of dog racing in the area, which was an “evil” because of its gambling component.

Oh well, you can’t have everything. So I’m a man without a perfect exemplar.

I just hope I’m not a man without a country.

By Charles Jay

I have to applaud U.S. Representatives Steve Israel (D) and Peter King (R) of New York for showing some courage and leadership in addressing the issue of online gambling in a recent editorial in the New York Post. The title of the piece is “Web Gambling: Tax, Don’t Ban” which is exactly what they are asking for, as co-sponsors of Barney Frank’s Internet Gambling Regulation and Enforcement Act, which as I have discussed her has some problems but isn’t a bad step forward for the industry.

In pointing out that the anti-gambling law had been snuck onto a port security bill just under the deadline that ended the legislative session in 2006, Messrs. Israel and King call the enforcement against this kind of activity to be “trivial,” and that “Frankly, federal law enforcement officials have bigger fish to fry.”

Is it trivial, and unenforceable, as the editorial claims? Probably. Would taxation and tight regulation be the answer? I figure it is, only if it the only alternative available to prohibition. Remember, I’m coming from an angle of “revenue the government could have otherwise,’ but one that is characterized by personal choice and freedom. I think that it is inaccurate and misleading, as Israel and King write, that “our bans on Internet gambling have been effective only in pushing the business off U.S. shores and out of the hands of scrupulous businesses.”

The businesses that operate in the online gambling industry are, at least for the most part, scrupulous in their business practices. If they were not, the market for online gambling would not have developed to the point that they alarmed politicians in the first place. You see, to grow the industry that much, people have to be able to depend on getting paid when they win. It would have collapsed if that weren’t the case.

Here’s how they close the editorial:

Years ago, the Treasury’s Secret Service agents used to help Harry Truman put poker games together in the White House. Now they’d be locking him up.

They’re certainly right about that.