EiG Report, part 2

[Vallerius]

Now that I've had some time to digest everything about the EiG experience I'll try to relate some thoughts to you all.

I believe that the conference's closing panel was the best panel/presentation I've heard in three years of covering the industry. This was a panel composed of CEO's of major companies, including Lewis Rose of CryptoLogic, John Anderson of 888, Mitch Garber of PartyGaming, and Eduardo Agami of SBG Global. The most amusing insights came from Mitch Garber, whose responses I am slightly wary of.

Mitch is a well-polished guy, sharp dressed and articulate, and very persuasive. He also cut his teeth in the financial industry as the CEO of Fireone (FirePay) for several years before joining PartyGaming, so he should be very knowledgable about the implications of the new law and its ability to be effective. However, I question his motivations for saying some of what he said. I can easily see how it might be in his best interest to deceive the audience into believing that the law will be more effective than it will be. In doing so he can both scare other companies away from the US market (which his company obviously would like to return to eventually) and make his company's actions look righteous and justified.

Garber said that while there were gaps in the law before, the new bill has closed them significantly, to the extent that responsible public companies are unable to operate. He also said that nobody has spent more money to fight the prohibition bill than his company. He suggested that if the fight for the right to gambling online is to continue then the private companies will have to take over the fight. He also thinks it's brave for private companies to think that they won't be the next arrested. He thinks its naive to believe journalists' speculation that loopholes will allow uncoded transaction to continue. He says this is a very serious criminal law and his company is therefore taking it very seriously. He thinks the government will find alternative ways to code transactions, and then some of the companies that continue to service the US market will begin facing money laundering charges in contravention of the Leach law. He says the US will be able to succeed in extradition attempts and the whole ensuing process will paint the industry in a very bad light.

I do remain somewhat skeptical of some of Garber's assessments, but I must give them fair credence. He no doubt has great experience in the financial and gambling industries and no doubt can afford the most expensive legal advice. Hearing him speak made me think about a lot of things differently.

The panel ession on the US prohibition provided a few enlightening ideas, but not as many as I'd hoped. Panelists included Brett Hale, VP of the American Gaming Association, Dan Walsh, an industry lobbyist, Mark Spragge, a British lawyer, and Mark Balestra, VP of publishing for River City Group. The most valuable information came from Walsh, who stated that even though the regulatory systems to police financial transaction have not been devised by the Fed yet, the law is now active upon the president's signing, meaning that criminal violations might now take place. He also stated that the only commercial interest that actively supported the bill were America's major sports leagues, the MLB, NBA, NFL and NHL.

Walsh said that "the whole point of the Leach bill is ambiguity," and that "in any particular room you will probably have as many different legal opinions about the bill as you have lawyers in the room."

Walsh addressed the question of how the hell could such a bill pass if readers polls consistently show that about 75 percent of the public does not think the government should outlaw Internet gambling. The answer is that the perception in DC is that the 25 percent who do think the government should ban it are Christian conservatives, who actually will vote on the issue, while the other 75 percent are generally politically unmotivated and won't vote on the issue. Basically, the people whose vote is effective support the bill.

The British lawyer, Mark Spragg of law firm Jeffrey, Green Russel, gave a rather dismal view what the bill means for foreign companies who contravene the law. He believes that international laws essentially provide the US with extradition on demand, especially where the UK, France and Ireland are concerned. I contend however that the UK and offshore jurisdictions have serious and viable grounds that might enable them to refuse the extradition requests because the activity in question is something that they fully license and regulate as a legal venture.

Walsh said he thinks intrastate gambling is still not likely to occur for a while because the Department of Justice still believes the Wire Act prevents all forms of Internet gambling.

Other notes from the conference:

One idea that was expressed to me more than once as to why some companies (private included) would choose to turn away from the American market even though the law would appear not to apply to uncoded transactions like checks and ACH. Well, the people behind these companies have already run successful operations for years, and now they've made their millions and they can live a comfortable life, so why should they continue to take risks? It's a lot safer for them not to take chances and to enjoy the luxuries they have already obtained than to risk losing all of it.

I noticed that several of the mainstay exhibitors that show up with booths at every conference did not have booths at EiG, including Neteller, Real Time Gaming, Playtech, the Interactive Gaming Council and CryptoLogic. Real Time Gaming and Playtech were show sponsors though. I'm not sure why these companies had no booths, I doubt that it is due to the US prohibition, I think it is probably more likely that they feel they no longer get much value out of exhibiting. This is just pure speculation though.

Toward the end of the day on Thursday I walked to a hotel near the convention center to have a few drinks in the lobby. There were several prominent individuals in the i-gaming sector hanging around here, and it was then that I noticed that I hadn't seen much of any of them in the conference sessions or in the expo hall. I am also aware that a lot of conference rooms in some of the neighboring hotels had been reserved for private meetings, so I am pretty certain that many private meetings were taking place among the various companies during these days.

[big fish]

thanks for the updates bradley.

this is like a really fast roller coaster that nevers ends...

[Paolino]

Thanks Bradley, great to read your thoughts as usual

[hitorstand]

Great post. Any discussion about legal implications for affiliates - especially regarding aiding and abetting? This is another issue with as many opinions as lawyers in the room....