a publication of the international masters of gaming … · 2009. 3. 27. · sue mcnabb, assistant...

Supplement to Casino Enterprise Management Magazine

VOL. 2 NO. 3 SUMMER 2006

A P U B L I C AT I O N O F T H E I N T E R N AT I O N A L M A S T E R S O F G A M I N G L AW

Michael LiptonPresident

Anthony N. CabotPresident

2004-2005

Robert Stocker, IIVice President

Anthony ColesSecretary

James B. DeutschTreasurer

John SullivanVice President

Affiliate Members

Frank CataniaPresident 2002

Heidi StaudenmaierPresident 2003

VOLUME 2 NUMBER 3 Summer 2006

Casino Lawyer is published four times a year by CasinoServices Publishing, LLC . Copyright © 2006 IMGL Inc.

This material may not be reproduced without written permission.

PRESIDENTMichael Lipton

Elkind & Lipton, LLPToronto, Ontario, Canada

(416) 367-0871

VICE PRESIDENTRobert Stocker, ll

Dickinson Wright, PLCCLansing, Michigan, USA

(517) 487-4715

SECRETARYAnthony R. Coles

Jeffrey Green RussellLondon, England

011 44 207 339 7000

TREASURER & MEMBERSHIP DIRECTORJames B. Deutsch

Blitz, Bardgett & Deutsch, L.C.Jefferson City, Missouri, USA

(573) 634-2500

VICE PRESIDENT AFFILIATE MEMBERSJohn Sullivan

Territory IncorporatedLas Vegas, Nevada, USA

(702) 222-1402

PRESIDENT 2002Frank Catania

Catania Consulting GroupNorth Haledon, New Jersey, USA

(973) 427-2500

PRESIDENT 2003Heidi McNeil Staudenmaier

Snell & Willmer, LLPPhoenix, Arizona, USA

(602) 382-6366

PRESIDENT 2004-2005Anthony N. CabotLewis & Roca, LLP

Las Vegas, Nevada, USA(702) 949-8280

Officers

Summer 2006 Casino Lawyer 11 Casino Lawyer Summer 2006

ContentsVOLUME 2 NUMBER 3 Summer 2006

page 6

DEPARTMENTS

1 Officers

3 Message from the President

5 Membership Update

6 Message from the Editor — Bigger, Better, Bolder

8 Message from the Executive Director

Upcoming EventsBy Robert Hannum9

New Developments in the European UnionOnline Gambling Advertising in the U.K. By Tony Coles10New Developments in Native American GamingNIGC Revises Class II Regulations By Heidi McNeil Staudenmaier12New Developments in Internet GamingIs I-Gaming Law Paving a Dead Track? By Tony Cabot14Gaming Lawyers and EthicsConfidentiality Ethics By Martha D. Moore16Gaming Law and PolicyClass II vs. Class III Reforms By Kathryn R.L. Rand and Andrew Light18Jurisdiction ProfileGaming Erupts in Asia By Bill Thompson21

INDEX OF ADVERTISERSCasinoFest 2 ................................................................................................................................inside front cover

IMGL............................................................................................................................................................back cover

Lewis & Roca ............................................................................................................................................................5

Dickinson Wright ....................................................................................................................................................7

Snell & Wilmer ......................................................................................................................................................42

Elkind & Lipton ......................................................................................................................................................42

IMGL 2006 Regulator of the YearAfter eight years as the Chair of the Gaming Board, Peter Dean isundertaking a new role. By Sharon Harris

24FEATURE

2 Casino Lawyer Summer 2006

page10

Summer 2006 Casino Lawyer 3

This summer marks a milestone inCanadian gaming law. In 1956, a legislative committee issued a reportrecommending measures designed toliberalize gaming and betting. Thereforms seem small and quaint in retrospect, but at the time they weremajor steps, so much so that Canadawaited another 13 years before actuallyreforming.

When considering submissions of theAmerican Gaming Association (AGA) inits white paper on Internet gaming,such submissions would have beenanathema to the authors of that report50 years ago, and yet, they may havelaunched us forward.

In mid-20th century Canada, gamingand betting was subject to far-reachingprohibitions in the Criminal Code.Commercial and governmental actorswere forbidden from “lottery schemes”or “modes of chance.” Since these pro-hibitions, no thorough review of gaminglaw had occurred. Two ad hoc exemp-tions were introduced over time, applica-ble to (i) certain limited games at agricul-tural fairs, and (ii) small raffles at bazaarsfor religious or charitable objects.

On July 31, 1956, a Joint Committee ofthe Senate and House of Commons ofCanada issued its Report on Lotteries,which called for larger lotteries, licensedby provincial or delegated authority in aid of religious, charitable, or community purposes, providing certainconditions were met.

The committee determined laws thatrestrain “lotteries and other indulgences”could not be enforced with adverse pub-lic opinion. As a result, the committeesaw violation of both spirit and letter ofgaming laws, frequently by organizationsheld in esteem by the community, withboth laws and law enforcement in con-tempt as a consequence:

“It was contended that lack of public support for existing prohibitions hadresulted in inability to enforce the lawand this in turn had tended to bring the

law into disrepute. Relaxation, whichwould bring the law into step with publicopinion, was urged as the solution for thepresent difficulty. . .” (emphasis added)(65-68).

“It was the Committee’s belief that theprincipal aim of new legislation shouldbe to provide workable laws which willreceive public support and which canbe effectively enforced” (71-72).

Government’s struggle to adapt toonline gaming seems inexplicable. Thewestern world has spent the last tenyears rediscovering principles the com-mittee expounded 50 years ago. Aftersupporting the federal government’sposition of absolute prohibition againstInternet gaming, the AGA in April 2006modified its position.

Yet, the AGA was not willing to go so faras to declare current U.S. policy of prohibition a failure. Its white paper onthe issue states “[prohibitory] measuresalone, however, are not going to solvethe problem. In fact, these proposalscould have the unintended conse-quence of forcing Internet gamblingfurther underground, making it moredifficult for law enforcement to track.”

In a line similar to the 1956 report, thewhite paper states: “Disrespect spreads forlaws that are neither enforced nor evi-dently enforceable against an activity thatenjoys wide and growing popularity.”

A number of statements reflect the needfor support of gaming legislation thatprovides protections and creates eco-nomic activity that will receive support:

“Avid online gamblers are surely notdeterred by current policies; indeed,public opinion research has found thata majority of online gamblers believe itis either legal to wager online or areunsure about its legal status” (15).

“…the current policy of prohibitionalready permits a high volume ofInternet gaming while imposing no regulatory policies to protect gamblers.

By driving all Internet gaming businessto foreign entities, the current regimealso ensures that no jobs are created forAmerican workers, no returns areearned by American companies, and notax revenues are paid to American governments” (14).

Consequently, the AGA declared itssupport for a bill introduced by Reps.John Conyers (D–MI) and ChrisCannon (R–UT) that would strike astudy commission which would identify changes to federal laws andregulations with the aim of:

• preserving state prerogative to regulate gambling within their borders;

• minimizing adverse impacts, such as underage gambling, money laundering, and problem gambling;

• preserving tribal sovereignty;

• clarifying and harmonizing federal laws of Internet gambling;

• providing appropriate taxation and licensing of Internet gambling; and

• deterring Americans from placing bets with unlicensed offshore gambling web sites.

This commission, if formed, would provide “workable laws which willreceive public support and which can beeffectively enforced,” as the report stated 50 years ago. Plus ça change, plusc’est la méme chose (the more thingschange, the more they stay the same).

Perhaps governments seeking to addressonline gaming will rediscover thesebasic principles: that laws of prohibitiononly work when their aims enjoy amplepublic support, and failing such support, the best public protection government can offer comes from regulation, not prohibition.

Michael [email protected]

Message from the President


ContentsVOLUME 2 NUMBER 3 Summer 2006

page 34

IN EVERY ISSUE

Skills versus Chance: A Delicate DanceSkill and chance factor legality for casinos and players.

By Robert Hannum

27MEMBER ARTICLES

French Casinos vs. Francaise des Jeux:The War for Online GamblingFrench casino legislation is unfit for today’s virtual industry.

By Thibault Verbiest

30

Keeping an Eye on i-Games: eCOGRA and eGAP Mandate Fair ConductRegulating jurisdictions recognize the need for standards.

By Murray Marshall

32

Breaking New GroundA Canada-based study offers a glimpse at long-term benefits and pitfalls of electronic gambling. By Laura Ward

34

The Implied Partial Repeal of the Wire ActDoes the amended IHA irreconcilably conflict with the Wire Act?

By Ben Hayes

36

The Future of Sports Betting in GermanyIn its present form, sports betting violates the constitutional rights offreedom of profession.

By Dr. Wulf Hambach and Dr. Hendrik Schöttle

41

Belgian Federalization Restructures Gaming LawThe reluctance of legislative bodies to deal with internet gambling layin practical difficulties.

By Fabrice Mourlon Beernaert and Jean-Philippe Smeets

45

IMGL Membership Application49

DVR Technology Secures SurveillanceAdvancementsGaming expansion means security and surveillance will impact gaming regulation.

By Dr. Wulf Hambach and Dr. Hendrik Schöttle

43

page 14


JUNE 2006New FirmsFabrice Mourlon Beernaert, Attorney at Law, Dechert LLPAvenue Louise 480 (Box 13), 1050 Brussels, BelgiumTel: +32 2 535 54 11, Fax: +32 2 535 54 34, Cell: +32 [email protected]

Olga Finkel, WH LawSuite A-A, Dolphin Court, Embassy WayTa’ Xbiex, MaltaTel: +356 21 332 653, Fax: +356 21 332 490, Cell: +356 79 657 [email protected]

Garron Whitesman, Whitesmans AttorneysWaterview Park, 1 Waterview CloseCentury City Boulevard, Century CityCape Town, South Africa 7441Tel: +27 21 528 9891, Fax: +27 21 551 4602, Cell: +27 72 416 [email protected]

New Affiliate ConsultantCharles H. Barry, Charles H. Barry & Associates5130 South Ft. Apache Road #215-108Las Vegas, NV 89148Tel: +1 702 396 4950, Fax: +1 702 597 3246, Cell: +1 702 232 [email protected]

Affiliate CounselAvi Levy6550 Cote-de-Liesse St-Laurent, Quebec, Canada H4T 1E3Fax: +1 450 635 7137, Cell: +1 514 702 [email protected]

Murray Marshall, Legal Counsel, Kahnawake Gaming CommissionP.O. Box 1799, Kahnawake, Quebec, J0L 1B0Tel: +1 403 995 2370, Fax: +1 403 995 2352

Affiliate Regulator New PositionJohn N. Roberts, Executive DirectorSan Pasqual Band of Mission Indians, Tribal Gaming Commission16300 Nyemii Pass Road, PO Box 2320Valley Center, CA 92082Tel: +1 760 291 5684, Cell: +1 858 603 [email protected]

New Affiliate RegulatorsKenneth M. Dreifach, Chief, Internet BureauOffice of New York Attorney General120 BroadwayNew York, NY 10271Tel: +1 212 416 8456, Fax: +1 212 416 8369, Cell: +1 347 210 [email protected]

Charles McIntyre, General Counsel, Massachusetts State Lottery60 Columbian StreetBraintree, MA 02184Tel: +1 781 849 5515, Fax: +1 781 849 5579, Cell: +1 781 760 [email protected]

Sue McNabb, Assistant Attorney GeneralLouisiana Department of Justice, Office of the Attorney GeneralPost Office Box 8423Clinton, LA 70722Tel: +1 225 326 6511, Fax: +1 225 326 6599, Cell: +1 225 241 [email protected] or [email protected]

Thomas C. Nelson20 Via Sierra GrandeManitou Springs, CO 80829Tel: +1 719 685 9387, Fax: +1 517 913 [email protected] or [email protected]

Removed from Membership List(not renewing)Don BourgeoisChristopher James MurphyLloyd Charles NathanThomas Nelson

Recommend removal from Membership ListJohn K Fitzgerald – no longer with CryptologicGeneral Counsel, Cryptologic Inc.Toronto, Ontario

Richard L. Robbins970 Lily Pond LaneFranklin Lakes, New Jersey 07417Tel: +1 201 405 0012 (no answer), Fax: +1 201 405 1176


Bigger, Better, Bolder:The New Layout of Casino Lawyer

By Tony Cabot

As the International Masters of GamingLaw continues to grow, the fundingfrom our members provides the organi-zation with the opportunity to expandits services. We recognized that weneeded a strong, experienced executiveofficer to assist in managing both themembership and the growth of theorganization. I am particularly excitedthat Melissa Lurie, who has a terrificknowledge of our industry and a wealthof experience, has accepted our offer tobecome the first IMGL executive director.From the perspective of the CasinoLawyer, Melissa’s assistance in dealingwith authors, contributors, and publisher allows us to expand andimprove the format of the magazine.

The new format, which will be incor-porated in steps over the next fewissues, retains many of the features ofthe existing magazine including thewell received gaming law articles prepared by our members. We will alsocontinue our regular feature stories ontopics such as the Regulator of the Year,profiles of industry executives thathave a law background, and previewsof our upcoming conferences.

We hope to expand our coverage in themagazine to provide current informa-tion on our members and upcomingevents. The new format has two newcolumns, “Members in the News” and“Upcoming Events.” Members shouldsend news and event information toLurie at [email protected]. Infuture editions of this magazine, wewill have a column on “Past IMGLEvents and Photos.” So any amateur


photographers (including TinaSingletary) are encouraged to bringtheir cameras to chronicle the IMGLevents.

New developments play an importantpart in the practice of law. We will havefour new columns on current develop-ments by topic and locale, including“Case Law,” “European Union,”“Native American Gaming” and“Interactive Gaming.” Two of thosecolumns debut in this issue.

We are also adding a column,“GamingLawyers & Ethics,” written by ProfessorMartha Moore from the Cooley LawSchool in Lansing, Mich. ProfessorMoore so impressed the audience at theABA Gaming Law Minefield conferenceearlier this year, that one conferenceattendee indicated it was the first session on legal ethics he attended thatwas truly interesting. I am certain you

will find the coverage beginning thismonth equally enlightening.

Professors Kathryn Rand and StevenLight from the law school at theUniversity of North Dakota are providinga regular column entitled “Gaming Law& Policy.” Light’s portion of the articlewill focus on the politics of the gamingissue and Rand’s will focus on the law

concerning the same issue. This columnalso debuts in this issue.

The final new feature will be a regularcolumn by UNLV Professor BillThompson that will provide a legal andeconomic profile of a different gamingjurisdiction. Thompson is also workingon the first major IMGL book that willsummarize, in a consistent format, thegaming laws and regulations of theworld’s major gaming jurisdictions.

Lastly, as the size of the magazineincreases, so does its cost. Anyoneinterested in helping to defray the costof the magazine by advertising shouldcontact Lurie.

We needed a strong,

experienced executive officer

to assist in managing

membership and growth

of the organization.

Anthony N. CabotLewis & Roca, LLP

Las Vegas, Nevada, USA(702) 949-8280

Lurie earned a Bachelor of Sciencedegree at Cornell University in theSchool of Hotel Administration. Sheresides in Boulder with her husband, ahotel executive, and her two children.

“I am proud to be the Executive Directorof the IMGL. I have been familiar withthe organization since it was foundedand am very impressed by the quality ofthe members and their commitment tothe gaming law profession andexchange of professional information.The volunteer officers and committeechairs have done fine work, and withmy support, I think we can accomplishour mission and make the associationhighly valuable to members,” Lurie said.

One of Lurie’s first goals is to make thewebsite (www.gaminglawmasters.com)a better representation of IMGL’s imageand a marketing tool full of pertinentinformation. She encourages membersto send personally-authored articles,summaries of speaking engagements,digital photos, changes in position, andany other information to share withmembers and associates. “I will be wear-ing the hat of photographer at all IMGLevents, so smile the next time you seeme. You may see your photo published.”


The International Masters of GamingLaw would like to introduce MelissaLurie as their new Executive Director.

The IMGL, now in its fifth year, hasmade a strategic move to prepare theorganization for the next step in itsdevelopment. “We felt we were ready tohire a senior staff member to direct theefforts of the committee members andhandle the day to day operations of the association. Melissa came to myattention through one of our foundingmembers. With her longtime back-ground working with both lawyers andthose in the gaming industry, she is theideal fit for the IMGL,” Michael Lipton,IMGL President said.

Many of the members have known ofLurie’s work through her conferenceplanning company, Meeting interface,which she formed in 1994 while basedReno, Nevada. Along with her partners,she developed the American, Northern,and Southern Gaming Summits. Luriehas produced meetings for IMGL member firm Lionel Sawyer & Collins,the National Center for ResponsibleGaming, Harvard Medical School’sDivision on Addictions, MississippiCasino Operators Association, AscendMedia, Deutsche Bank, Casino JournalPublishing Group, and the MississippiHotel & Lodging Association.

Prior to Meeting interFACE, she workedin the Meetings and Travel Departmentof the American Bar Association, whereshe planned their Annual and Mid Yearmeetings. Before becoming a meetingplanner, Lurie worked for Marriott andHilton Hotels in sales and conventionservices.

IMGL Announces New Executive Director

By Melissa Lurie

“I think we can

accomplish our mission

and make the

association highly

valuable to members.”

— Melissa Lurie, IMGL

Executive Director Melissa Lurie can be reached [email protected] or (303) 449-9955


JULYGREAT BRITAIN

Multi-Platform Gaming 2006 The New Connaught Rooms, LondonJuly 4-5, 2006www.ATEOnline.co.uk/conferences

NEVADAHispanic Gaming Summit Paris Las VegasJuly 18, 2006 www.hispanicgamingsummit.com

Casino Marketing: The 2006ConferenceParis Las Vegas July 18-20, 2006www.casinomarketing2006.com

Bodog.com MarketingConference 2006 Las VegasJuly 24-25, 2006www.bodogconference.com

SINGAPOREAsian Casinos Executive Summit2006 Grand Hyatt, Singapore July 24-27, 2006www.terrapinn.com/2006/ace_sg/

TAIWANGTI Expo 2006 Taipei World Trade Center, Taipei July 7-9, 2006www.taiwanslot.com.tw

WASHINGTONNorthwest Indian Gaming Conference and ExpoTacomaJuly 24-26, 2006www.washingtonindiangaming.org/news.html

AUGUSTCHILE Chile Casinos - Entertainment and Business Espacio Riesco, Huechuraba, SantiagoAugust 23-25, 2006 www.chilecasinos.cl

NEVADAFederal Bar Association AnnualMeeting and ConventionJ.W. Marriott Las VegasAugust 23-26, 2006http://www.fedbar.org/LasVegas_2006.html

PERUPeru Gaming Show Lima August 3-4, 2006www.perugamingshow.com

SEPTEMBERAUSTRALIAAustralasian Gaming Expo Sydney Convention & ExhibitionCentre, Sydney September 3-5, 2006www.austgamingexpo.com

CALIFORNIA CasinoFest 2Barona Valley Ranch Resort & Casino,LakevilleSeptember 11-13, 2006www.casinofest.org

9th Indian Gaming NationalMarketing Conference Pechanga Resort & Casino, Temecula September 25-27, 2006www.indiangamingmarketing.com

HUNGARYGamexpo 2006 SYMA Sport and Event Center,BudapestSeptember 12-14, 2006 www.gamexpo-hungary.com &www.gamexpo.hu

NEVADACasino Affiliate Convention &Gaming Marketing ConferenceStardust Resort & Casino, Las VegasSeptember 14-15, 2006www.cac2006.com &www.gmc2006.com

NOVEMBERNEVADA7th Annual NCRG Conference on Gambling and AddictionThe Rio All-Suite Hotel, Las VegasNovember 12-14, 2006


With the Gambling Act 2005 passed butnot yet enforced (expected no earlierthan September 2007), the advertisingof online and other interactive gam-bling in the U.K. is in a state of flux. Thenew legislative regime is based on thefundamental premise that advertising isa mainstream entertainment productand, when properly regulated, shouldnot be unduly restricted. Therefore, cur-rent restrictions on gambling advertis-ing will be relaxed and, indeed, the gov-ernment has indicated it intends allgambling sectors (including “hard”gaming) should enjoy essentially thesame freedom to advertise. However,until the 2005 act is in force, the posi-tion under the existing law is complexand inconsistent.

This period of transition coincides withtremendous growth in the industry andoperators are looking to exploit existingadvertising opportunities until the new,more liberal, advertising regime begins.

The current advertising landscape isaffected by both statutory provisions andvarious codes of advertising practice.

U.K. licensed bookmakers, who mayoperate online, are not restricted by leg-islation from advertising, although theycannot advertise individual bettingshops and the Committee of AdvertisingPractice (CAP) Broadcast Code preventsboth bookmakers and gaming operatorsfrom advertising on television and radio(with exceptions for the NationalLottery, bingo and pools promoters).

Online Gambling Advertising in the U. K.

By Tony Coles and Nick Nocton


Accordingly, U.K. bookmakers canadvertise in non-broadcast media,including newspapers and billboards.Such advertising is subject to the CAPNon-Broadcast Code and must beresponsible, must not be directed toanyone under 18 and must not depictanyone who is, or appears to be,under 25.

Meanwhile, the commercial bingoindustry undertakes significantamounts of both broadcast and non-broadcast advertising.

The provisions of section nine of theBetting and Gaming Duties Act 1981effectively prohibit overseas bookmak-ers from advertising in the U.K. through“traditional” media. Whether sectionnine would be enforceable against book-makers licensed in other EuropeanUnion member states, followingjurisprudence of European Court ofJustice in cases such as Gambelli, isdoubtful. The provision is binding on asportsbook located in Gibraltar,although the effect of any such provi-sion against companies with no U.K.interests is doubtful.

Meanwhile, online gaming, whichcannot be provided by the U.K., is sub-ject to a controversial advertisingrestriction. Section 42(1)(c) of theGaming Act 1968 provides nobody caninvite people to subscribe money ormoney’s worth in gaming, whether inthe U.K. or elsewhere, or to invite people to apply for information aboutfacilities for doing so.

This provision has traditionally beenunderstood, including from consulta-tion with the Gaming Board (now theGambling Commission), as allowingnot only the advertising of factualinformation, including domain name,but also invitational content, providedthe invitation was not to subscribe (orpay) money for gaming. Therefore,offers of free entry into poker tourna-ments were generally consideredacceptable, whilst offers to matchmoney deposits might not be.

However, a recent explosion in non-broadcast advertising by offshore gam-ing operators led the U.K. governmentand the Gambling Commission to pub-lish delineated guidelines under section42. The guidelines say any inducementor encouragement to gamble is prohibit-ed, completely ignoring the reference insection 42 to subscribing money ormoney’s worth.

As a consequence, the guidelines havebeen received with almost universalskepticism in the industry. However,many large operators who are eitherlocated in the U.K. and may thereforewish to obtain a new Remote GamingLicense once the 2005 act is in force, orwho are simply interested in advertising

ability in the U.K. once the new regimecomes into force, are willing to compro-mise their campaigns, despite shortcom-ings of the guidelines’ interpretation ofsection 42.

Whether any operator who openlyflouts the guidelines is likely to be pros-ecuted (as the guidelines threaten) maybe open to doubt. We understand thatthe Crown Prosecution Service, whowould currently be responsible for anyprosecution (since the GamblingCommission only becomes a prosecut-ing authority once the 2005 act comesinto force), are unwilling to bring any

test cases and are said to doubt the merits of the guidelines.

Any advertising by offshore gamingoperators must also comply with theCAP Non-Broadcast Code (see above),and, apart from offshore bingo operators, they too may not advertiseon television or radio.

Increasingly, in recent times, gamingcompanies have used other methods forsponsorship. A recent revision of theOfcom Broadcasting Code, which governs program content and associatedissues, significantly diluted existingrestrictions on gambling companies.

Previously, they had not been able tosponsor programs which had contentsimilar to their products. This preventedbookmakers from sponsoring televisedsports, including racing, and poker companies from sponsoring televisedpoker. This has changed. The form andcontent of sponsorship messages andtheir distinction from advertising slotsare the subject of the Ofcom code. Butsuffice to say, the sponsorship messagesare often very similar to advertising.

In addition, companies are looking forbrand exposure during television pro-grams themselves. There is a generalrule in the Ofcom Code against commercial messages or content in TVprogramming. Editorial justification isone exception to this rule, although thisis tricky to manage. A further andincreasingly well used exception isevent or team sponsorship.

Gaming companies are increasinglysponsoring events (for example, therecent 888.com World ProfessionalSnooker Championship, and the brand-ed poker tournaments) and sports teams(a further example with 888.com is itssponsorship of Middlesbrough TownFootball Club). The exposure of suchsponsorship assures these brands makedeals extremely valuable.

The current advertising

landscape is affected by

both statutory provisions

and various codes of

advertising practice.


After a virtual holding pattern for over ayear, the National Indian GamingCommission (NIGC) finally publishedproposed Class II ClassificationRegulations in late May. Given the longand arduous journey of getting to thispoint, reaching the finish line with finalpublished rules will not be an easy task.

Class II games are defined in the IndianGaming Regulatory Act (IGRA) as bingoand games similar to bingo. Electronictechnologic aids to such games are per-missible, while electronic facsimiles of“any game of chance or slot machinesof any kind” are not permitted. Class IIgames currently are regulated exclusive-ly by Tribes and NIGC — the individualU.S. state governments have no regula-tory powers over Class II gaming.

In 2004, NIGC commenced draftingproposed classification regulations gov-erning Class II gaming. To assist withthe drafting process, NIGC formed ajoint Federal-Tribal advisory committee.Multiple drafts were publicly circulatedover the course of the year, with volu-minous comments received from tribesand others in the gaming industry.

In early 2005, NIGC prepared to send itsfifth draft of the proposed regulations tothe Federal Register for publication andbegin the official rule-making process.That process, however, came to ascreeching halt when the United StatesDepartment of Justice (DOJ) jumpedinto the fray. Since 2000, the DOJ hassustained multiple setbacks in the courtsin seeking to label certain Class II gamesas “gambling devices” subject to crimi-nal enforcement under the Johnson Act,or alternatively as Class III devices

requiring a state-tribal compact. As aresult, the DOJ told NIGC that it wouldvigorously oppose the proposed classifi-cation regulations because the DOJ feltthey did not go far enough in definingand regulating Class II gaming devices.

Thereafter, NIGC and the DOJ tried tofind common ground and negotiateclassification regulations that satisfiedboth entities. These negotiations ulti-mately led to the DOJ’s issuing pro-posed amendments to the Johnson Actin October of 2005. The draft legisla-tion was targeted expressly to includeClass II devices within the scope of theJohnson Act.

The proposed Johnson Act amendmentssparked immediate controversy withinthe tribal gaming industry. The DOJ andNIGC held various tribal consultationsaround the country, where the voiced

criticism of the draft legislation was uni-form and in some cases quite heated. Asa result, in a surprising about-face, theDOJ announced earlier this year itsintent to significantly revise the draftamendments.

The DOJ has yet to issue a scaled backproposal. Notwithstanding, the newlyproposed Class II regulations appear toincorporate some of the DOJ concerns.In the preamble to the proposed rules,NIGC contends too much time haselapsed since the DOJ sent the proposedJohnson Amendments to the Office ofManagement and Budget earlier thisyear, and it is not likely the proposedlegislation will pass during the currentCongressional session. Thus, contendsNIGC, “[t]he need to regulate Class IItechnologic aids has not diminishedand the [NIGC] is compelled to proceedwith these regulations.”

NIGC acknowledges proposed regula-tions differ from the fifth draft circulat-ed in April of 2005. NIGC advises in thepreamble such changes are “a result ofthe [NIGC] addressing the concerns ofDOJ that these regulations clearly dis-tinguish between Class II and Class IIIgames.”

NIGC further notes the changes “relateto the size of the bingo card as well asthe time period for the release of num-bers.” Additionally, the proposedchanges “require a fixed notification tothe player that the game they are play-ing is a game of bingo, a game similar tobingo, or a game of pull tabs.” The pro-posed rules also prohibit pull tabmachines from paying winnings in anyform.

NIGC Revises Class II RegulationsBy Heidi McNeil Staudenmaier

Class II games currently

are regulated exclusively by

Tribes and NIGC — the

individual U.S. state

governments have no

regulatory powers over

Class II gaming.


To make the foregoing changes, NIGCpublished two separate, but relatedrules. The first proposed rule seeks toadd a new Part 546 which attempts toprovide a bright line between Class IIbingo, lotto, other games similar tobingo, played primarily through elec-tronic or other technologic aids, andClass III facsimiles of any game ofchance.

The second proposed rule seeks toamend 25 CRF Part 502.8 dealing onlywith the definition of electronic orelectromechanical facsimile of anygame of chance. NIGC asserts therevised definition is intended to makeclear all games, including bingo, lottoand other games similar to bingo, whenplayed in an electronic medium, are fac-similes when they incorporate all “fun-damental characteristics” of the game.Thus, facsimiles of bingo would not bepermissible Class II games under IGRA.

NIGC Chairman Phil Hogen, uponannouncing the proposed regulations,stated, “The Indian gaming industry isin need of this classification in order toknow which games need to be playedunder compact and which do not.” Inthe preamble, NIGC advises it is “con-cerned that the industry is dangerouslyclose to obscuring the line betweenClass II and III.... The future success ofIndian gaming under IGRA dependsupon tribes, states, and manufacturersbeing able to recognize when games fallwithin the ambit of tribal-state com-pacts and when they do not.”

The proposed regulations include defi-nitions for terms not previously defined.Specifically, NIGC defines a “game” inthe phrases “game of chance commonlyknown as bingo” or “other games simi-lar to bingo,” contending by addingsuch definitions the player “will knowwhen the game begins, when the gameends, and what the player must do toparticipate and win in an individualgame.”

NIGC also claims it has defined “thegame of pull tabs,” “electronic pull tab,”

and “instant bingo” using terminology“commonly accepted in the federalcourts.” NIGC also proposes definitionsfor the terms “bonus prize” and “pro-gressive prize” to distinguish them fromthe game-winning prize.

The draft rules also purport to clarifyterms used in the existing statutory def-inition of bingo when the game isplayed primarily through electronic,computer, or other technologic aids.

The proposed rules offer criteria fordealing with cards and prizes – two“essential elements” of bingo, lotto andother games similar to bingo. For exam-ple, the cards must be “clearly visible”

on the video screen and the screen mustdisplay a card that is at least one half theavailable space on the screen. The rulesdo permit, however, that other featuresand game themes may be placed on theother half of the screen.

With respect to prizes, the rules man-date that a game-winning prize have aminimum value of at least 20 percent ofthe amount wagered plus one cent.

Other proposed definitions include theterms “designations” and “first person”in the context of bingo or games similarto bingo. In this regard, NIGC proposesthat a minimum of two seconds be pro-vided after the completion of each

release of numbers or other designationsfor players to complete each cover(daub) opportunity. Each game alsomust be played by at least two playersand the game must be designed so thatat least six players may enter a game.Games cannot begin until two secondshave elapsed from the time the firstplayer elects to play, unless six playersenter.

Finally, NIGC provides that, before atribal gaming operation may conductelectronic Class II games, such gamesmust be certified as “meeting the criteriaestablished by the [NIGC’s]Classification Standards by an inde-pendent testing laboratory recognizedas qualified to perform such testing.”NIGC intends to propose technical stan-dards at a later date in a separate rule.

The proposed rules are available on theNIGC website (www.nigc.gov) and onthe Federal Register website(http:www.access.gpo.gov/su_docs/aces/fr-cont.html).

Tribal consultations are scheduled invarious locations around the countrythrough the summer, with the intent toconclude such consultations by mid-August. Consultations are currentlyplanned for: Washington, DC; Denver,Colo.; Minneapolis, Minn.; Tacoma,Wash.; Ontario, Calif.; and OklahomaCity, Okla.

Heidi McNeil Staudenmaier is the PartnerCoordinator of the Indian Gaming PracticeGroup for Snell & Wilmer, where she isbased in the law firm’s Phoenix, Arizonaoffice. She is a founding member of theInternational Masters of Gaming Law andPast President. She serves as AssociateEditor of “The Gaming Law Review”. She is a frequent writer and speaker onIndian gaming issues and can be contacted at 602.382.6366 or [email protected].

After a virtual holding

pattern for over a year, the

National Indian Gaming

Commission finally

published proposed Class II

Classification Regulations

in late May.


You think you have seen it all, and thenyou are flabbergasted. Here is the latestepistle coming out of Washington D.C.in relation to the Internet GamblingProhibition Bill, an act proposed byVirginia Sixth Congressional DistrictRepresentative Bob Goodlatte andintroduced on February 16, 2006.

This bill seeks to expand the scope ofthe current Federal Wire Act to prohibitmost forms of gambling activity overthe Internet, except those whereGoodlatte feels he must placate someinterests to get his bill passed. The WireAct currently only prohibits the trans-mission of bets or wagers, or informa-tion assisting in the placing of bets orwagers, on sports wagering in interstateor foreign commerce.

Skipping wisdom (or lack thereof) toprohibit (or, more appropriately,attempting to prohibit) Internet wager-ing, the preamble to the bill has thisshocking statement:

It is the sense of Congress that this Act doesnot change which activities related to horseracing may or may not be allowed underFederal law; section 5 is intended to addressconcerns that this Act could have the effectof changing the existing relationshipbetween the Interstate Horse Racing Act (15U.S.C. 3001 et seq.), and other Federalstatutes that were in effect at the time ofthis Act’s consideration; this Act is notintended to change that relationship; andthis Act is not intended to resolve any exist-ing disagreements over how to interpret therelationship between the Interstate HorseRacing Act and other Federal statutes.

When considered in context, the legali-ty of interstate wagering on horses has

Is I-Gaming LawPaving a Dead Track?

By Tony Cabot


been and continues to be a matter ofsubstantial debate between the horseracing industry and the Department ofJustice. Despite that DOJ argues this is anillegal activity, it has taken no enforce-ment action against the 20 or so compa-nies that openly conduct interstateaccount wagering in the United States.

Even more telling, about 16 states havespecifically authorized licensed compa-nies to engage in this multi-billion dol-lar activity. The situation from DOJ’sperspective is that they decided againstenforcing laws they think are openlyviolated, and more topical, yet stringentlaws they will not likely prosecute.

Actually, the horse racing industry hasbeen accepting interstate accountwagers for about 25 DOJ-free years. Theindustry has relied on a portion of theFederal Wire Act that contains an excep-tion or “safe harbor” provision for thetransmission of information on anysporting event or contest between stateswhere betting on such events is lawful.

The horse racing industry also pointedto the Interstate Horse Racing Act(IHRA), passed by Congress to promotethe stability of horse racing and off-track betting in the United States. Thetrue intent of IHRA was to assure thetracks receive a fair share of interstatewagers on races conducted. This wasaccomplished by requiring the off-trackbetting (OTB) operator to negotiate acontract with the track to conductwagering on the track’s races wherebythe off-track betting operator must paya track fee.

In contrast, DOJ took the position thatinterstate pari-mutuel off track wageringviolates the Wire Act; the “safe harbor”provision does not apply to accountwagers, and IHRA does not authorizetransmitting bets across state lines. Ofcourse, because DOJ never prosecutedanyone, determining who is right is difficult.

This dispute came to a head, not in acourtroom, but at a Congressional com-mittee hearing in 1999 when Congressdebated Goodlatte’s previously failedattempt to pass the Internet Gambling

Prohibition Act. At that hearing, theDOJ representative stated he thoughtaccount wagering was unlawful.

Understandably, this position generatedconcerned responses from horse racinggroups, especially since DOJ had neverpreviously “used the Wire Act to prose-cute any state licensed and regulatedentities for conducting interstate simul-casting, commingling of pools, oraccount wagering.”

Moreover, the Ninth Circuit has heldthe criminal provisions of section 1084are not applicable to the activity oflicensed pari-mutuel wagering where itis lawful under state law. In accord,other federal courts have recognized the“legislature drafted the exception in§1084(b) specifically to accommodatethe desire of some states to legalize off-track betting.”

As a direct result of that controversy, thehorse racing interests solicited the helpof Kentucky Republican Senator MitchMcConnell to “fix” the law. The solu-tion: avoid controversy with the FederalWire Act attendant with the InternetGambling Prohibition Act and seek clar-ification through an amendment to theInterstate Horse Racing Act of 1978.

The amendment passed in 2000 to clarifypari-mutuel wagering may be placed viatelephone or other electronic media(including the Internet), and accepted byan off-track betting system where suchwagers are lawful in each state involved.Yet in spite of the 2000 amendment, theUnited States Department of Justicecontinued to take the position thatexisting prohibitions under the Wire

Wager Act were not affected. But, again,it decided not to prosecute open “viola-tions” of the law. DOJ repeated thisassertion as recently as last month inanother Congressional hearing on theGoodlatte Bill. In that hearing, a DOJofficial stated:

The Department of Justice views the exist-ing criminal statutes as prohibiting theinterstate transmission of bets or wagers,including wagers on horse races. TheDepartment is currently undertaking a civilinvestigation relating to a potential viola-tion of law regarding this activity. We havepreviously stated that we do not believe thatthe Interstate Horse Racing Act, 15 U.S.C.Section 3001-3007, amended the existingcriminal statutes. H.R. 4777, however,would change current law and amendSection 1084 to permit the interstate trans-mission of bets and wagers on horse races.

What is the solution when a multi-bil-lion dollar industry is in jeopardy andwhere thousands of jobs in the heart-land of America are in risk? The answeris simple…go to the policymakers inWashington D.C. and seek clarificationof the law.

Then, ask them the tough question –what is more important: the future of thecritically infirm sport of horse racing, orthe morals of Americans, who wouldotherwise bet on the outcome of ponies’fortunes from the comfort of home?

So, decide.

Nobody wins. Congress provides thesense that it intends to “resolve anyexisting disagreements over how tointerpret the relationship between theInterstate Horse Racing Act and otherfederal statutes.”

One observation is inevitable: What theheck do we pay congressional membersfor? I thought it was to make policy, notto proliferate mucked up laws that noone understands or cares to enforce.Now we have lawmakers refusing tomake laws that DOJ will not enforceanyway. Some people, like me, stillquestion the efficiency of the Federalgovernment.

The horse racing

industry has been

accepting interstate

account wagers for about

25 DOJ-free years.


Question: Does the gaming attorneyhave the responsibility to disclose negative information on a client if suchinformation might materially impactthe client’s ability to obtain a license?

Answer: One of the fundamental tenetsof the attorney-client relationship is thelawyer’s ethical duty of confidentiality.1

In fact, ABA Model Rule 1.6 requireslawyers to maintain client confidencesand secrets. Any information obtainedin the course of the attorney-client rela-tionship that is not general knowledgeis protected by the broad ethical duty ofconfidentiality. This duty survives thetermination of the attorney-client relationship, and even survives theclient’s death. In fact, the ethical dutyof confidentiality lasts forever.

The objective of the ethical duty of confidentiality is to promote franknessand candidness by clients in dealingwith their lawyers. Confident that information shared with their lawyerswill be kept confidential, clients are freeto fully converse with their lawyers,even disclosing embarrassing and/or detrimental information.

This open and candid flow of informa-tion enables lawyers to consider allinformation relevant to the cause,whether good, bad or neutral. Lawyersare then equipped to thoroughly andfairly evaluate their clients’ matters andto provide optimal advice and counsel.

Indeed, the lack of full disclosure byclients may cause substantial harm tothe clients’ matters, oftentimes resultingin prejudicial surprise or the completedisassembling of a case.

Given the broad reach of the ethicalduty of confidentiality, lawyers may not

disclose negative information about aclient without the client’s informedconsent, or implied authority.Notwithstanding the strict require-ments of preserving client confidences,lawyers may also reveal confidentialinformation under an exception enumerated in ABA Model Rule 1.6(b).Pursuant to this Rule, a lawyer mayreveal confidential information relatingto the representation to the extent thelawyer reasonably believes necessary inthe following situations:

(1) to prevent reasonably certain deathor substantial bodily harm;

(2) to prevent the client from commit-ting a crime or fraud that is reasonablycertain to result in substantial injury to financial interests or property ofanother and in furtherance of which theclient has used or is using the lawyer’sservices;

(3) to prevent, mitigate or rectify substantial injury to financial interestsor property of another that is reasonablycertain to result or has resulted from theclient’s commission of a crime or fraudin furtherance of which the client hasused the lawyer’s services;

(4) to secure legal advice about the lawyer’scompliance with [the ethics rules];

(5) to establish a claim or defense onbehalf of the lawyer in a controversybetween the lawyer and the client, toestablish a defense to a criminal chargeor civil claim against the lawyer basedupon conduct in which the client wasinvolved, or to respond to allegations inany proceeding concerning the lawyer’srepresentation of the client; or

(6) to comply with other law or a court order.

In short, lawyers may disclose negative information about a clientwith the client’s informed consent,implied authority or the applicationof an exception specified under theethics rules.

More importantly, strict gaming-lawregulations often require gaming agentsto consent to inspections, searches and seizures and to disclosure of infor-mation otherwise protected by theattorney-client privilege. In this regard,lawyers are required to communicate toclients the advantages, disadvantages,and the consequences of granting suchconsent (often in the form of a waiver).

Clients are then able to make informeddecisions about the waiver.2 While gamingregulations often require gaming agents towaive the attorney-client privilege, it mustbe noted that it is the client’s decisionalone whether or not to execute such awaiver, notwithstanding the almost certain negative outcome of the gamingmatter absent the execution of the waiver.

Undoubtedly, the preservation of confidential client information is ahigh-stakes game and lawyers must bevigilant in safeguarding client confi-dences and secrets. Nevertheless,lawyers are always free to counsel clientsand to advise them of attendant benefits to full disclosure. After fullyconsidering counsel’s advice, there is anincreased likelihood that clients will

Confidentiality Ethics By Martha D. Moore

1 Model Rules of Professional Conduct R. 1.6 (2005).

2 Model Rules of Professional Conduct R. 1.4 (2005); see also Model Rules of Professional Conduct R. 1.0(e) (defining informed consent as “the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.”).

authorize disclosure of negative infor-mation, thereby alleviating the issuealtogether.

Lawyers must also be cognizant thatwhile the ethical duty of confidentialityis expansive, it is not absolute. The dutydoes not extend to a client’s intentions tocommit a crime or fraud.3 This holdsespecially true in the gaming industry,where vigilant regulatory agencies keepwatchful eyes to guard against the infiltration of criminal activity. Nor doesthe duty permit lawyers to conceal orparticipate in a client or witness’ lack ofcandor before a tribunal, gaming regula-tory bodies, or administrative agencies.4

Question: What if the information isnot negative per se due to a responsibleexplanation, yet would be consideredan area that regulators would otherwisewant to explore?

Answer: As stated above, lawyers maynot disclose negative information pertaining to a client, whether perceivedor real, absent client consent, impliedauthority, or the application of an excep-tion under the ABA Model Rule 1.6(b).

However, lawyers in the discharge of theirduties should advise clients of the benefitsof full disclosure at the outset. The forth-right disclosure of “not per se” negativeinformation will likely foster trust withgaming regulators. Similarly, up front disclosures signal openness and trust-worthiness to gaming officials, which canonly enhance the clients’ cause.

On the other hand, the likely eventualdiscovery of the “not per se” negativeinformation may lead gaming regulatorsto draw negative inferences from themere fact that the information was notdisclosed in the first place, regardless ofthe “responsible explanation.” Yet,prompt disclosure of “not per se” nega-tive information provides lawyers withthe opportunity to fully explain theinformation and to dispel its negativeflavor, an unequivocal benefit to clients.

Question: What should an attorney doupon the discovery of negative informa-

tion in the course of an investigationwhen a client refuses to allow the attor-ney to disclose information to gaminginvestigators?

Answer: As emphasized herein, the eth-ical duty of confidentiality is fundamen-tal to the integrity of the lawyer-clientrelationship. Negative informationuncovered about clients in the course ofa lawyer-client relationship is protectedinformation and must be held inviolate.

Notwithstanding the above, lawyersmay not assist clients in a crime orfraud. Nor may lawyers present false evi-dence to a tribunal. Significantly, whilelawyers may be unable to unilaterallydisclose negative information aboutclients, lawyers may not assist clients inpresenting false evidence to a tribunalor gaming administrative agencies.

In other words, while lawyers may berequired to remain hushed about nega-tive information pertaining to clients,lawyers may not actively participate inpresenting this same negative informa-tion to a tribunal or administrativebody on behalf of clients. Notably, therules governing conduct of lawyersdelineate minimum standards by whichlawyers must conduct themselves.However, exceptional lawyers conductthemselves in a manner exceeding theprescribed minimum standards. Whilelawyers must generally place clientinterests above their own, lawyers mustpurposefully and deliberately guard andprotect their reputations for honestyand integrity.

A lawyer’s good reputation is expedientin establishing and maintaining a suc-cessful gaming practice. This holdsexceptionally true in the gaming arena,often perceived in a suspicious and neg-ative light, whether rightly or wrongly.Correspondingly, if clients ultimatelyreject lawyers’ advice to disclose nega-tive information, lawyers should seek towithdraw from the representation.

Martha D. Moore is a Thomas M. CooleyLaw School Associate Professor who haspracticed law since graduation from theUniversity of North Carolina School ofLaw-Chapel Hill in 1983. The authorteaches Civil Procedure and ProfessionalResponsibility. Additionally, the author hasconcentrated her practice in the area of professional ethics and responsibility, having served as a prosecutor for theMichigan Attorney Grievance Commissionand thereafter defended lawyers in attorneydisciplinary proceedings.


3 Model Rules of Professional Conduct R. 1.2(d) (2005).

4 Model Rules of Professional Conduct R. 3.3 (2005) .

Attorney-Client Privilege Gone Oh-So-Wrong

By Lonna Whiting

It’s no secret that attorney-client confidentialityis a necessary function of modern ethical law. Butwhen attorneys grow as greedy as some of theirrichest clients, legal boundaries can go awry.

According to The Indonesian Connection, inAugust, 2004, Honolulu attorneys representingbusinessman and former Bank of Honolulu chair,Sukamto Sia, paid an estimated $6.25 millionafter they helped secretly hide his assets fromcreditors.

Sia, imprisoned in 2001 for debt fraud, filedbankruptcy in Honolulu, “claiming he had near-ly $300 million in debts and only $9.3 million inassets,” according to catbirdseat.net. In reality,the face value of Sia’s assets were later estimatedat $53 million.

Attorney Renton Nip, who acted as Director forthe Bank of Honolulu during Sia’s tenure as chair,and representatives of the Verner Liipfert lawfirm purportedly “entered into an overarchingconspiracy to conceal and divert assets from(Sia’s) bankruptcy estate,” Guido Giacometti,Sia’s trustee, said.

The businessman, a gambler, owed millions toseveral casinos, his bankruptcy estate, aSingapore bank, and the Federal DepositInsurance Corporation.

Later, London Clubs International, Aspinall’sClub, and Rio Casino were awarded just $2.5 mil-lion of the reported $12 million in initial claimsthey filed against Sia.

So, whether it’s a slap on the wrist or having topay millions for conspiracy, mom’s golden ruleabout lying truly has a function in the real world.


In this article, Rand explores the nature ofClass II legal reforms, and Light explainshow political pressures shape DOJ’s ClassII reforms.

The line between electronic bingogames and slot machines may not shinein glaring neon. Last fall, the U.S.Department of Justice (DOJ) announcedit would propose amendments to theJohnson Act to clarify the line betweenClass II “technologic aids” and Class IIIslot machines under the federal IndianGaming Regulatory Act (IGRA).

Under IGRA, Class II games are subjectto tribal regulation with oversight by the National Indian GamingCommission (NIGC), while Class IIIgames require a tribal-state compact.Furthermore, the “Gambling DevicesAct Amendments of 2005” wouldrequire that Class II devices be “readilydistinguishable from Class III gamesbased upon the manner in which players participate in the game and theappearance of the game to the players,”including speed of play and graphics.At the time of this writing, the NIGChad announced two new proposed ruleswith similar ends.

As a law professor and a political scien-tist, our research on Indian gaming isinterdisciplinary, bringing law, publicpolicy, political science, and publicadministration to bear on myriad issuesin tribal gaming. In this edition of ournew regular column, we draw on pre-sentations at a recent professional con-ference where we addressed legal andpolitical implications of such reforms.

Like many other recent efforts to reformIndian gaming law and policy, the DOJproposal lacks appropriate context andforesight. Some may view the conceptu-al line between Class II and Class IIIdevices as “blurred,” which is problem-atic and artificially divorced from thepolicy goals of Indian gaming.

The question shouldn’t be whether amember of Congress can see the difference between an electronic bingomachine and a slot machine; it shouldbe whether current regulation and

operation of Class II games meet threeoverarching policy goals of tribal gaming.

Goal One: Provide for effective regulation.Indian gaming — including Class IIgaming — must be effectively regulat-ed. Two key aspects of effective regula-tion are to ensure fair and honest play,and to protect the proceeds. There isnot a clear indication that current reg-ulation of Class II machines, eventhose that look like slot machines, iscapable of ensuring fair play and pro-tecting revenue.

Instead, the primary impetus behindthe call for reform appears to be two-fold: the idea that anything similar to aslot machine carries higher risks of casi-no-style gaming, and the fact manystates want greater political and legalcontrol of current Class II devices.Treating devices as Class III gameswould require a tribal-state compact; asa result, tribes will have to negotiatewith states over a host of issues, includ-ing the number and type of machines,revenue sharing, and, in this post-Seminole Tribe world, quite likely otherissues, such as treaty or natural resourcerights, that may be entirely separatefrom the goal of gaming regulation.

If the DOJ and Congress present theimpetus for drawing a “bright-line” distinction between Class II and ClassIII devices as a regulatory problem, theyshould bear the burden of demonstrat-ing, with sufficient factual findings,why this is the case.

Indian Gaming Law:Class II vs. Class III Reforms

By Kathryn R.L. Rand, J.D. and Andrew Light, Ph.D.

“There are right and

wrong ways to think

about Indian gaming issues.

These overarching policy

goals, which have not

changed significantly

since Congress passed IGRA

in 1988, should serve

as lodestars for

legislative reform.”


Goal Two: Facilitate tribal institutionbuilding. One of the largely unrecog-nized successes of tribal gaming, at leastoutside of Indian Country, is the role ithas played in tribal government institu-tion building. Class II gaming helpstribes build effective and responsiveinstitutions in a number of ways.

First, Class II gaming allows tribes instates without casino-style gaming, likeOklahoma, the opportunity to build,manage, and regulate a sophisticatedClass II enterprise.

Second, since no tribal-state compact isrequired, Class II gaming allows tribes tomake decisions free of state politicsabout effective regulation, appropriateuse of revenue, appropriate economicdevelopment and growth, and otherexercises of sovereign authority, includ-ing preservation of cultural traditions ortribal norms.

Third, Class II gaming allows tribes anopportunity to demonstrate effectivegovernance, which can be very impor-tant in terms of the respect they areafforded by state and federal officials,agencies, and policymaking or legisla-tive bodies.

Fourth, Class II gaming provides tribesan opportunity to raise revenue tounderwrite or extend tribal governmentfunctionality and responsiveness, evenwhen Class III gaming is unavailable asa matter of state law, or if a tribe has itsown concerns about engaging in ClassIII gaming.

Furthermore, Congress should weighcarefully any reform that will diminishthe Class II market, as tribes’ ability tobuild strong tribal governments willsimilarly be diminished.

Goal Three: Catalyze mutual respect andgovernment-to-government negotiationsand relations. Reforms in the area ofClass II and Class III gaming ought tostem from government-to-governmentnegotiations, which should requiremore than a few “consultation” meetings and a formal comment period.

Any legislative reforms themselvesought to facilitate, not undercut, gov-ernment-to-government relations. Weadvocate the pressing need for a“Seminole fix.” Most people tend to seeIndian gaming as fair and balanced interms of tribal versus state power, or asan unfair advantage for tribes due totribal sovereignty.

But taking a step back and placingIndian gaming in its appropriate con-text of tribal sovereignty and federalIndian law and policy (as we do atlength in our recent book, IndianGaming and Tribal Sovereignty: TheCasino Compromise), it’s plain that stateshave the upper hand in terms of negoti-ating Class III gaming terms.

If the DOJ and Congress want to movemore games into Class III, it becomeseven more important to level thenegotiating table for tribal-state com-pacts. Congress must be careful thatany reform does not become yetanother advantage for states in termsof pressuring tribes for revenue sharingor other concessions that may under-cut the overarching policy goals ofIndian gaming.

There are right and wrong ways to thinkabout Indian gaming issues. These over-arching policy goals, which have notchanged significantly since Congresspassed IGRA in 1988, should serve aslodestars for legislative reform.

What has changed since 1988 is thattribes have become extraordinarilysuccessful in many ways throughIndian gaming, including Class II gam-ing, raising revenue, strengtheningtribal governments, and leveragingeconomic development. But that, inand of itself, is not problematic; infact, it’s the exact opposite.

Politics: Class II Gaming ReformsToday Indian gaming politics invariablyrevolve around calls for reform. Theindustry is pressured on a number offronts. One allegation is that the linebetween electronic bingo and slotmachines has become inextricably

blurred, requiring swift and decisivecongressional action to amend theIndian Gaming Regulatory Act (IGRA).

Why does it appear that Congress willchoose to step in to “clarify” the dis-tinction between Class II and Class IIIgaming, and why now? Recent events aswell as ongoing perceptions come intoplay in shaping the politics of the ClassII controversy:

Indian gaming is “too successful.”Alongside the legalized gambling indus-try more generally, tribal gaming hasgrown rapidly into a $19 billion dollarindustry. This phenomenon, includingthe relative success of Class II gaming,apparently has caught many policymak-ers off-guard.

As U.S. Senator John McCain recentlystated, “Never in Congress’ wildestdreams . . . did we envision Indian gam-ing would become the $19 billion-a-yearenterprise that it is today.”

While Senator McCain and others willnot give a specific threshold for howmuch economic success is too much intheir minds, apparently the line hasbeen crossed.

The “perfect storm.” In the last year,tribal gaming has been buffeted by a“perfect storm” of political controver-sy. The Senate Committee on IndianAffairs, chaired by Senator McCain,has held a blizzard of hearings on top-ics related to Indian gaming, includ-ing the spread of so-called tribal“reservation shopping” in pursuit ofoff-reservation gaming (also an issuefor House Representative RichardPombo); allegations that non-tribalinvestors, managers, or unscrupulouslobbyists, such as Jack Abramoff, are“taking advantage” of tribes; varioustribal groups seeking federal recogni-tion, with the backing of wealthy out-side interests, allegedly solely for thepurpose of “cashing in” on Indiangaming; and questions about theextent and effectiveness of tribal andfederal regulation under IGRA, includ-ing allegations of tribal corruption.


The Abramoff scandal at first generat-ed a political tsunami that threatenedto drown all discussion of Indian gam-ing’s benefits to many tribes; morerecently, off-reservation gaming hasdone the same.

Public backlash. Public opinion abouttribal gaming always has been difficultto manage. As we document in IndianGaming and Tribal Sovereignty: TheCasino Compromise, many Americanshave major misconceptions abouttribes, tribal sovereignty, and therationale behind or legality of Indiangaming. The stereotype of the “richcasino Indian” is prevalent in popularculture and even mainstream mediainfluences how policymakers act onIndian gaming.

Federal agency pressure and interagencycontestation. The U.S. Department ofJustice (DOJ) has taken on the issue ofdrawing a bright line between Class IIand Class III gaming in part because of aclear directive from Senator McCainthat someone needs to step up to do so.(He made this statement at an April2005 hearing on Indian gaming regulation at which we testified.) Yetone open question is whether the ClassII vs. Class III distinction is a matter that more appropriately belongs inCongress’ legislative jurisdiction with-out pressure from the executive branch.

Within the Bush Administration, therehas been a clear difference of opinionexpressed by DOJ and the NationalIndian Gaming Commission (NIGC) onthe need for this clarification, or how togo about it — through NIGC rulemak-ing, congressional amendment to IGRA,or DOJ enforcement of the Johnson Act.The DOJ is not making this easy onNIGC, although the pressures appliedmay have resulted in interagency com-promise to resolve potential interagencycontestation.

Responsible and responsive policymak-ing — a non-partisan, non-ideological,and intergovernmental imperative —requires both content and process. Inaddition to the overarching policy goalsof tribal gaming, Congress also should

resist reforms borne of political pressureand inadequate information. Congressshould take two preliminary stepsbefore enacting any reforms related toIndian gaming, and certainly should doso in the context of Class II gaming.

Step 1: Gather complete and accurate information. There is a surprising lack of understanding and an incredibleamount of misinformation aboutIndian gaming and its socioeconomic

effects, not just on tribes, but on surrounding communities and stateeconomies. For the sake of effective pol-icymaking, Congress should continue togather information related to IGRA’sspecific enumerated policy goals: thefacilitation of tribal self-government,economic development, and self-deter-mination. This includes the effects ofClass II gaming, and the distinctionsbetween tribal and non-tribal casinos.

Congress must ask itself whether it hasa full understanding of the impacts ofClass II and Class III gaming. A sensethat technology blurs the distinctionbetween the two is not enough.Indeed, legislating simply to stay aheadof technology is frequently a no-winproposition — and may undermineIGRA’s policy goals. We could avoidsuch confusion if we were to form aNational Indian Gaming ImpactCommission to gather and analyzedata about Indian gaming as a platformfor responsible policymaking.

Step 2: Acknowledge shared goals andinterests. The federal, state and local,

and tribal governments share manygoals and interests related to Class II aswell as Class III gaming. These includereducing reservation poverty andunemployment rates, creating jobs forAmerican Indians and non-Indiansalike, stimulating local economies andleveraging economic development,increasing government revenue andfunding delivery of public services,reducing disbursement of public entitlement benefits, minimizing socialills associated with gambling, includingcrime and addiction, preserving andstrengthening tribal tradition, culture,and communities, and facilitating stated federal goals of tribal self-governance and self-determination.Policymakers should ask, “Are we look-ing at these shared goals? Will creatinga brighter line between Class II andClass III further these goals, or undercutthem?” Asking and answering thetough questions will prevent hasty orill-informed policymaking.

Congress’ far-sighted goals in enactingIGRA should outweigh any short-termtechnological “fix” for its perceivedinadequacies. Political posturing,agency power plays, or mere expediencyshould not be the underlying rationalesfor dealing with the complexities ofIndian gaming today.

Kathryn R.L. Rand ([email protected]) isthe Floyd B. Sperry Professor and AssociateDean for Academic Affairs at the Universityof North Dakota School of Law. StevenAndrew Light ([email protected]) is an associate professor of politicalscience and public administration at theUniversity of North Dakota.

They are the co-directors of the Institute forthe Study of Tribal Gaming Law and Policy(http://www.law.und.nodak.edu/npilc/gaming/index.php) and write a blog onIndian gaming issues, Indian GamingToday (http://indiangamingtoday.com).They are the authors of Indian Gaming and Tribal Sovereignty: The CasinoCompromise (University Press of Kansas,2005) and Indian Gaming Law andPolicy (Carolina Academic Press, 2006).

“States have

the upper hand

in terms of

negotiating Class III

gaming terms.”


Korea lies surrounded by active casinomarkets and potentially active casinovenues. Macau and Singapore areemerging as prime casino locations,while Japan, the Chinese mainland, andTaiwan have populations feeding allcasinos within reach.

At the beginning of 2006, Korea had 14casinos, yet had not capitalized on itsgeographic location. It is now showingsigns of wanting to, but its pursuedchanges are misdirected.

Of Korea’s casinos, only two are notable:Walker Hill Casino, Seoul, and KangwonLand Casino, Kangwon Province.Twelve other casinos are not even “bitplayers.” One is in Incheon, othersBusan (Pusan), Mt. Seoraksan NationalPark, and Bomum Lake. Eight small casinos are on Jeju Island, a resort destination off Korea’s south coast.Several thousand visit the Walker Hilland Kangwon Land facilities each day,but a two-day visit to all Jeju casinos in2004 revealed a total of four open tablesand three people playing slot machines.

In 2005, plans for a second and thirdSeoul casino were formulated, as well asa second casino in Busan. The 15th casi-no opened as a government-operatedfacility near Seoul in January, 2006.

Gambling was a tolerated nuisance during most of Korea’shistory. Games such as Bak Hyuk,Too Jeon, and Too Hoe, had been

popular since the era of theThree Kingdoms in the first

millennium.

However, it was notuntil 1961 that there

was a national lawwhich banned all gambling.

Ironically, as soon as the law was passed,pressure built for a new law that provid-ed exceptions. A 1962 law legalizedgambling in Korea for non-Koreans. In 1968, the first casino opened atIncheon, followed by Walker Hill.Eleven other casinos opened under thelaw’s provisions1. The casinos are underthe regulatory control of theDepartment of Culture and Tourism.

Among the traditional casinos, onlyParadise Walker Hill, opened in 1968,has demonstrated consistent success. Ittargets foreign high-rollers. The averagegambler loses an incredible $589 pervisit. Gaming revenue exceeds $200 million a year2.

The state-owned Korean NationalTourism Organization started WalkerHill Casino. However, in 1973 it wassold to the Paradise Corporation, operated under the controlling hands ofChun Rak-won. The ParadiseCorporation also owns the Incheon,Busan, and one Jeju Casino, controllingover 75 percent of the casino revenuesof the 13 traditional casinos. The deathof Chun Rak-won in November 2004opened the door for consideration ofnew casino licenses for Seoul and Busan.

As the Paradise Walker Hill and theother “traditional” casinos cater to foreigners, the government allows themgreat leeway in operations. Self-regula-tion is pervasive. The Paradise of WalkerHill decides numbers and limits, theentrance fee (there is none), dress codes(minimum standards), credit policies(large amounts of credit are given), andcomplementary services (top playersreceive airfare, room, food, beverage,and show tickets). Plus, the casino provides free alcoholic drinks to playerson the gambling floor, and the facility is open 24 hours a day.

The facility attracts premium playersfrom Japan and China — Hong Kong,Taiwan, and the mainland, and theiraction adds to losses from standardtourists who have suffered from a slackJapanese economy. About 48 percentof players come from Japan, while 31percent are Chinese. Most other players — 21 percent to be exact —come from other Asian and Australianvenues. The marketing emphasis hasbeen on gaining players from mainland China. The flight to IncheonAirport, which serves Seoul, is onlyone hour from Shanghai, and twohours from Beijing or Hong Kong.

The other “traditional” casinos do notreflect the success of Walker Hill. Theidea of placing casinos on Jejuemerged in the 1970s as a tool for economic development. However, the

Gaming Erupts in Asia Korea Deficient in Casino Knowledge

By Bill Thompson

1 Lee, Choong-Ki, and Ki-Joon Back, “History, Development, and Regulation of Korean Casino Gaming,” paper presented to Conference on Casino Gambling, Osaka University of Commerce, June 2005.

2 Lee, Sang-Heon and Lyu, Hong-Chul, interview by Bill Thompson, March 13, 2004, Paradise Walker Hill Casino, Seoul, Korea; Lee and Back, 2005; Cabot, Anthony, William N. Thompson and Andrew Tottenham. 1993. International Casino Law, 2ed. Reno: University of Nevada.


casinos are facing a very dismal futureunless changes are made by marketingto foreign players. Most players arefrom Japan, while a sizeable minorityare from China. New competition maysoon cut into the small existing clien-tele. Japan may be considering thelegalization of casino gambling. If thishappens, it is quite likely new casinoswill be in both Osaka and Tokyo, thetwo cities directly tied by air service toJeju. Currently, there are also propos-als for two new Singapore casinos.Moreover, Macau is exploding withcasino growth, targeting more andmore Chinese players.

The second successful casino of Korea iscalled Kangwon Land. From outwardappearances it is just another big fancycasino in a large resort complex. Thecasino lets Koreans gamble; however,they must reside outside of KangwonProvince (except for one special dayeach month). The philosophy behindKangwon Land developed out ofnational legislation passed in December1995 in order to bring economic development to a depressed area, a former coal-mining center.

Officials of the Ministry of Culture andTourism decided a casino could be thecatalyst for tourist attraction develop-ment such as golf courses and ski runs.But Kangwon Province’s isolation wouldcreate a difficulty in drawing in foreigngamblers, especially since these playerswould first arrive in Seoul or Pusan.Special permission was given to allowKoreans to play.

The national government insisted on a major partnership in the casino project. They own a 36 percent share,while the province owns 15 percent. In 1999, shares equaling 49 percentequity in the company were sold to thepublic. A temporary casino opened inOctober, while a permanent casinoresort opened in 2003.

The casino welcomes 4,500 players aday. Each player loses an average of

$389 per visit, making the annual winof the casino in excess of $600 mil-lion3.While the casino pays the sameten percent tax on gaming wins as theother 13 casinos, they also pay an additional ten percent development fee.

Almost all players are Koreans.Therefore, the government takes a protective view toward players. Playersregister identities, showing addresses asthey pass through metal detectors.There is a 5,000 won ($4.50 U.S.)entrance fee, while residents of the

province of Kangwon are banned fromdaily play. They are allowed to play onone Tuesday each month. On that day7,000 patrons enter the doors. Justabout all players have made a treacher-ous drive of four to five hours fromSeoul or Pusan over mostly two-lanetwisting mountain roads. They willinglycrowd into a facility that is open from10 a.m. until 6 a.m. the next morning,except on Saturday evening, when itremains open all night long.

Here, unlike at Paradise Walker Hill, noalcohol is permitted in playing areas.The casino has a policy for dealing withproblem gamblers. Kangwon Land maybe the only casino in the world that hasa gambling treatment center on itsgrounds. Players are observed to see ifthey have compulsive traits.

The casinos may not offer credit play.However, players need not carry cash.They may simply obtain bank checksfrom their bank to purchase chips. As anadditional convenience, the casino has

a full-service bank branch inside thefacility.

The casino attracts 63 percent of its visi-tors from the Seoul area, and 35 percentfrom Pusan and other Korean areas out-side of Kangwon Province, with less thantwo percent from foreign jurisdictions.

With the exception of Kangwon Land,the Paradise Company used great politi-cal influence to stymie expansion in anumber of casinos. However, with thedeath of Paradise President Chun Rak-won, the political formula haschanged. A new expansion plan hasbeen predicated on a premise that Koreabreaks the casino monopoly held byParadise.

The plan has targeted two Paradise locations: Seoul and Busan. The firstcasino has been designated for thesouthern area of Seoul as a part of theHanmoo Convention complex. Thecasino will have an indoor theme parkcalled Lotte World. The casino is expect-ed to gain patronage of many foreignvisitors attending business conventions,as well as families on vacation. TheMillennium Hotel, a Hilton property inthe center of Seoul, was selected to alsohave a casino. The Lotte Hotel in Busanwas chosen as a third casino site.

The three new casinos will operate onthe model of Walker Hill and tradition-al casinos, and will only open to non-Koreans as 24-hour facilities.

There is concern for the expansionplans because of new policy efforts putforth by the Chinese government. TheParadise company had quietly but persistently marketed its properties tomainland China. However, the Chinesegovernment has an anti-casino philoso-phy which it feels is currently compro-mised by the promotions. Players aremonitored by the Chinese authorities,which has stifled their ability to come toKorea in a relaxed manner.

The Chinese should be cognizant oftheir interest in keeping new casinodevelopments in Macau vibrant in theface of international competition.

Several solutions may

be considered for dealing

with Korea’s casino status

quo and its deficiencies.

3 Lee and Back, 2005.


Several solutions may be considered fordealing with Korea’s casino status quoand its deficiencies.

The casino expansion in Seoul and inBusan is not likely to strengthen theKorean casino industry. But the govern-ment seems more interested in makingsure that the one successful casino company in the traditional market willsee a drop in revenue. They are simplycutting a pie into more pieces; they arenot baking a bigger pie.

If the goal was to have stronger casinosto compete for international customerswho may now consider gaming inMacau and Singapore, they could haveachieved the goal more easily bystrengthening existing facilities. Thedownside for the expansion plan is thatit presents a direct threat to China’splan to curtail gambling by Chinese (atleast outside of Macau), and it is anadded threat to Japan’s balance of tradewith Korea.

In the latter regard, the Japanese will be (or already are) experiencing anincreasing flight of gambling dollars toMacau and Singapore. Korean casinoopportunities are much more conve-niently located for the Japanese. If theseopportunities are expanded and target-ed to Japanese, such will provide a pushfor Japanese authorities to legalize casi-nos which accept Japanese and all otherplayers (and most particularly, Koreans).

The answer to the problem posed maybe quite simple on the surface. TheKorean national government could giveall the casinos a Kangwon Land solu-tion. They could allow Korean passportholders to enter the Jeju casinos, as wellas the casinos at Seoul, Busan, Mt.Seoraksan, Incheon, and Lake Bomum.As with Kangwon Land, the policychange could come with some restric-tions for local (city or island) residents.

The posed solution sounds easy, but isuneasily attained. The Paradise in Seouldoes not need Korean players, andmight even find them to be impedingtheir ability to offer top service to select-ed foreign guests. Of course, the

Paradise at Walker Hill could changetune when faced with direct competi-tion from two new Seoul area casinos.

Kangwon Land offers another obstacleto any change, as the notion of usingthe casino for economic developmentin the depressed coal mining region wastied to a monopoly status as a casino forKorean players. They were given guarantees they could retain a monop-oly status (at least to 2008) as theydeveloped a total resort “complex” withmountain skiing and golf courses.Changes in entrance requirements forother casinos would have to await the

end of a monopolized time commit-ment to Kangwon Land.

But a big monkey wrench is in thehands of the residents of Jeju and theirpublic leaders. Economics is one consideration, and locally depressedeconomies worldwide seem to beg fortourist dollars. But maybe this is not thecase with Jeju. Above all else, Jeju residents want autonomy, or at least asense they control their own island.They are a province of Korea (equivalentin standing to a U.S. state), and theyelect their own island government.

Jeju people welcome certain visitors: thepeace activists and international peaceconferences (American presidents Carterand Clinton both visited the island),and groups of nature-oriented tourists.But the traffic flooding the island asday-trippers or overnighters from themainland come to simply gamble — like

present tourists of Kangwon Land —might upset notions of control in theirown territory.

Rather than increasing the casino capacity of Korean gaming facilities,some efforts might serve a quite divergent policy, especially on JejuIsland. Policymakers may wisely mergeseveral Jeju casinos. They could poolresources and share revenue. Maybe apolicy of tax abatement for the facilitiescould encourage consolidation. A jointmanagement agreement could provideshared profits.

To encourage policies for consolidation,temporary tax abatements could be considered alongside permanent taxcredits for any investments, improvingtourist attractions on the Island. Indeed,all casino revenue beyond reasonableprofits could promote tourism on JejuIsland. One may seriously suggest if Jejuhad one casino (seaside) or two (seasideand city), the casinos might be sufficiently profitable to use high-rollermarketing strategies currently used byWalker Hill casino.

Korea has an interesting array of casinos, and an interesting set of problems regarding policies for theiroperation. While change seemsinevitable given difficulties faced bycasinos and dynamic international markets in which they operate, thepolitical environment surroundingKorean casino policy is likely to findpolitical leaders who “sit” on change asopposed to those who “act” on change.Each viable proposal for new conditionsbrings both opportunities and threats,and if a political culture of conservativereaction is faced with possible threatsattached to change, the status quo quiteoften prevails.

Bill Thompson is a professor of publicadministration at the University of Nevada-Las Vegas. He can be reached [email protected].

Gambling was a

tolerated nuisance

during most of

Korea’s history.

Peter Dean has easily settled into his position as Chairman ofGreat Britain’s Gambling Commission, following a distin-guished legal career of more than 40 years in the private andpublic sectors.

Prior to entering governmental service, Dean, a nativeof Kent in southeastern England, worked as in-housecounsel for Rio Tinto, one of the world’s largestinternational mining companies. His 20-year tenureincluded seven years as Corporate Counsel, two asCompany Secretary and another 11 as ExecutiveDirector.

Following successful anti-trust litigation againstthe government, Dean transitioned to public serv-ice by joining the U.K.’s Monopolies and MergersCommission. He served as Deputy Chairman forthe final eight of his 15 years in that office.

When his Commission tenure ended in 1998,Dean answered a job inquiry for Chairman ofthe Gaming Board for Great Britain. The job’sregulatory and legal components sparked aninterest, and he won the appointment.

Dean explained his lack of experience in thegaming industry had no adverse effect onhis prospects. On the contrary, Deanclaimed the British see advantages in aperson taking the job without any pre-

Peter Dean,Regulator of the YearBy Sharon Harris

conceived ideas or expectations. Hesaid, “The British invite people

into positions who, at the out-set, know little about the sub-

ject. They expect the indi-vidual to learn quickly.”

He served as the former Chairman ofthe Gaming Board forGreat Britain fromJuly 1998 untilOctober 2005, whenthe Gambling Com-mission was set upunder the GamblingAct 2005. The Actcomes into full forcein September 2007.

The legislation estab-lished the inde-pendent GamblingCommission, a non-departmental publicbody that is sponsoredby the Department forCulture, Media, andSport.

After eight years as Chairman of theGaming Board, Dean is undertaking anew role. The first Chairman of thenew Gambling Commission willassume the functions of its predeces-sor, but with broader powers andgreater responsibilities.

Purpose of the New CommissionThe Act states that the GamblingCommission will consist of a chairmanand other commissioners who areappointed by the Secretary of State.They are charged with regulating com-mercial gambling throughout England,Scotland, and Wales.

Their mission is to develop a programaddressing three licensing objectives:to keep crime out of gambling, toensure gambling is conducted fairlyand openly, and to protect childrenand vulnerable people.

Dean and his fellow Commissionershave issued a draft of their new codes ofpractice and licensing conditions,designed to maintain integrity and honesty in the industry, building onprevious regulations. The emphasis on

underage and problem gamblingincludes new regulations for remotegambling, which is more difficult tocontrol.

“I would like to see gambling normalizeas part of the leisure industry, whichwill happen when the operators recognize the three licensing objectives.The responsible operators need no lessons on fairness and honesty,” Deansaid. “They already support the premisewholeheartedly. It is a question of reinforcing and bringing the laggards upto standards, and getting wider acceptance by the public.”

Dean believes Internet gambling shouldbe evaluated realistically. “BanningInternet gambling is a vain endeavorthat is not practical. Regulating it makesmore sense, and the GamblingCommission will have the task to regulate it. We realize we cannot regulate other nations’ operators, and itis impossible to prevent British residentsfrom logging on to those sites. However,we will offer an alternative that is standardized and reputable. Any operator may come to Britain, get


certified and then offer remote servicesto anyone else. We believe that is thesmart thing to do,” Dean added.

The legal gambling age in Britain is 18,and the commission’s regulations willprohibit advertising to younger audiences by using individuals whoappear to be under 25. Parents takingchildren into gaming areas will faceexclusion or prosecution.

For Dean, problem gambling remainsan area that warrants much more investigation. He hopes for continuedresearch to learn more about its originsand what can be done to battle theaddiction. He said, “I look forward tohaving more light shed on this and Ihope that action taken to combat theproblem is more accurately and helpful-ly focused. We also want to look at co-morbidity, or the multiple addictionissues that many have.”

Preparing for Next Year’s Start DateDean’s prior experience has clearlyhelped him juggle the many compo-nents of his position. Although theSeptember 2007 start date is more thana year away, Dean remains busy preparing for the transitions.

The Commission will operate awayfrom London and the southeastern corner of England. The governmentmandated the relocation in an attemptto regenerate the economies of othercommunities. The new offices are beingreadied in Birmingham, 100 milesnorthwest of London.

Dean plans to be on-site three to fourdays per week. He says, “Birmingham isan easy 80-minute train ride. On theother days, I will still live in London anduse technology to work from my homeoffice. Sadly, we are saying farewell tomany of our loyal staff in London. Mosthave chosen to remain in London, and,happily, have all found new positions.”

Dean is enthusiastic about the promiseof a new organization and anotherexciting professional challenge. “Wehave recruited an excellent echelon ofsenior staff to our new premises, whichis half retrofitted. We expect comple-tion within a few months. Obviously,there are always glitches when movinghouse, but the dedication of thoseinvolved has made the ongoing transi-tion smooth,” Dean said.A budget of 15 million pounds (U.S.

$28 million), triple its current level,will accompany the increased authorityand responsibility. Dean said, “We areconducting our daily business whilesimultaneously preparing for a newstaff. At the outset we expect to have amaximum of 280 to cope with the initial surge of license applicationsexpected. Looking ahead, we willdecrease to approximately 200 as conditions settle down.”

Duties of the New CommissionThe movement to modernize Britain’sgaming laws promised more than itultimately delivered. As the final version of the legislation emerged, theearlier concept of eight “super casinos”scared Conservatives and some members of the British media. Theirobjections helped influence the lawmakers to scale the number of largeregional casinos back to just one, withup to 1,250 machines offering high orunlimited-prize jackpots.

Dean blames this situation on party politics. He points out that it will notimpact the commission’s duties sinceBritain already has more than 140 casinos, 700 bingo clubs, 8,000 bettingshops, gaming machines, and hundredsof Internet gaming sites. The GamblingAct allows 17 more casinos of threetypes: one regional casino, eight large,and eight small.

The new Gambling Commission isresponsible for setting and draftinggaming regulations in the public inter-est. The Gambling Commission willoversee all areas of gambling, excludingthe National Lottery and spread betting.They will issue both operator and twotypes of personal licenses – the first tokey executives with responsibility forthe casino’s operation; the second toindividuals, who as dealers, “affect theoutcome of the games.” Licenses will beportable, and may be taken from venueto venue.

In addition to certifying new operators,provisions have been made to grandfa-ther existing licensees into the system.However, Dean says that unlike some

other jurisdictions that investigate andcertify ancillary suppliers, the Britishprocess places an expectation on theoperator to ensure the honesty of theircasino vendors. He said, “The onlyexception would be for those crucialparts of a machine that an operatorcould not control. That would requiretheir own certificate.”

Enforcement authority will permit thecommission to levy unlimited fines andremove a violator’s license via prosecu-tion. If needed, they may use the police.

The commission will maintain its ownqualified technical staff, but will not doany of its own testing. Dean says thatthey will certify several competent test-ing labs to examine any company thatsupplies, installs, adapts, maintains, orrepairs machines, including softwaremanufacturers.

Dean believes his legal training will be agreat help in ensuring fairness on thejob. “The precepts I have learned as alawyer enable me to discharge opinionsin an objective manner,” he said.

In March, the commission drafted itsLicence Conditions and Codes ofPractice that establishes new rules allcasino operators must meet. The com-mission is consulting very widely onthese new rules by making question-naires and documents available on itswebsite. It is also holding focus groupsto find out more about public opinionof its proposals.

“The new code is enabling, following anintensive process of consultation. Wewanted to gather input from both regu-lar and irregular gamblers. We are con-tacting certain identifiable categories,such as faith groups, to provide all view-points,” Dean said. “We are analyzingthe write-ins, and will report back andaccount for why they were accepted orignored. I am also going on radio andtelevision to explain what we are doing.”

Dean is eagerly anticipating the futureof gaming in Britain. He believes thatwhen conducted properly, gamingoffers entertainment, employment andoverall economic growth to communi-ties and their citizens. He intends tolead the key group that will see to thathappening throughout England,Scotland, and Wales.

“The precepts I have learned as a lawyer enable me to discharge opinions in an

objective manner.”

This article examines the issue of skill versus

chance in light of the increasing appearance of

games of skill in the gambling arena and the

importance of the skill versus chance question

in legal standing of gambling games.

What is a Skill-Based Game?Online skill games range from tradition-al board and card games such as check-ers, chess, dominoes, mah-jongg, andmany variations of solitaire, to arcadegames such as Zuma and Haunted Mine,to puzzle games such as Tetris,Bejeweled and Jigsaw Genius, to wordgames such as Word Battle and Lingo, torepresentations of more active contestssuch as pool, darts, golf, and even snow-boarding1.

In theory, all of these games rely prima-rily on skill rather than luck and arelegal in most of Europe and the U.S.,which tend to be hostile to online sportsbetting and casino games. As noted byAnthony Cabot, a leading gaming attor-ney at the Las Vegas firm of Lewis andRoca, “By and large, the definition ofgambling is when you risk something ofvalue on a game predominately deter-mined by chance, for the opportunity towin something of greater value thanrisked. If it’s predominately a game ofskill, it’s going to fall outside that defi-nition and be legal in most states.”

Most everyone knows there are gamesin which skill plays no part — games ofpure chance — and games involving anelement of skill. From a mathematicalstandpoint, if the outcome of a game isdetermined by chance alone and nostrategy or skill can affect the long runpercentage of money won or lost, it is a

game of pure chance. Examples of suchgames are the standard versions ofroulette, keno, lotteries, and craps(ignoring alleged dice control).

In these games, the player can exerciseno control over the outcome. To usethe roulette example, a player bettingat double-zero roulette will lose onaverage 5.3 percent of the moneywagered, regardless of wagers made andbetting patterns.

There is no such thing as a good (or bad)roulette player; no amount of practicewill affect odds, probabilities, or houseadvantage in roulette; a novice rouletteplayer will fare just as well (or poorly) asan experienced roulette player.

In games involving skill, factors such asknowledge, judgment, learning, deci-sions, strategies, expertise, experience,physical abilities, or other such influ-ences, can affect the likely outcome.

More specifically, skill can be applied toalter odds, or more precisely, the statis-tical advantage. In a gambling setting, aplayer’s level of skill will affect the long-term percentage of money won or lost.

Casino games involving skill include:blackjack, poker, and video poker. In agame involving skill, the skilled playerwill fare better on average than theunskilled player. A blackjack playerusing basic strategy, for example, faces alower house edge than a player whodoes not use basic strategy.

There are good and bad blackjack play-ers; practice can improve odds andreduce the house advantage in blackjackand a novice blackjack player will tendto perform worse than a skilled black-jack player.

Among skill-based games, the type ofskill required to excel varies. Somegames of skill emphasize knowledge andanalytic ability, while others may placea greater premium on psychology orphysical attributes.

Further, the importance of skill will vary(games of pure skill such as tic-tac-toe,checkers, and chess which are devoid ofprobabilistic elements are the excep-tion) depending on the game and possi-bly other factors, such as specific rules,tournament play and structure.

Regardless of the particular skill or combi-nation of skills, what differentiates a gameof skill and a game of chance is the play-er’s ability to influence the game’s expec-tation, broadly defined as the expectedoutcome, through knowledge, judgment,decisions, and/or performance.

Skill versus Chance:A Delicate DanceBy Robert Hannum

1 Faust, Fred. “No Luck Required.” International Gaming andWagering Business, Oct. 2005

If the outcome of a

game is determined by

chance alone and no

strategy or skill can

affect the long run

percentage of money

won or lost, it is a

game of pure chance.


From a legal standpoint, classifying agame as one of pure chance or skillcan be a daunting task. This isbecause a game’s legal standing withrespect to skill versus chance is typi-cally decided by the predominancetest: is the outcome of the game deter-mined predominantly by skill orchance? Unfortunately, whether agame is one of predominantly skill orchance may not be obvious becauseassessing the relative importance ofskill versus chance in a game of mixedskill and chance is often problematic.As a result, there is disagreementacross jurisdictions on the legal stand-ing of various games.

The Case of Poker Arguably, the most notable and contro-versial game in which the question ofskill versus chance arises is poker. Thegame of poker has reached unprece-dented popularity because of a varietyof factors, including television andInternet exposure.

Historically, the presence of skill inpoker has perplexed courts whendetermining whether to classify pokeras illegal gambling or a permittedactivity. Most courts in the UnitedStates have relied on the predominancetest, and must decide whether skill orchance predominates.

The results have been mixed. In somestates, courts have concluded poker is agame predominately determined byskill; in others, poker is a game predom-inately determined by chance; and stillother states have determined poker is agame of mixed skill and chance.

Though the principle sounds simpleenough — the law generally prohibitsgames played for money that are pre-dominately determined by chance, buthave historically recognized games pre-dominately determined by skill to belegal — in most cases, courts have madethese decisions without distinguishingbetween poker game variants, and inthe absence of empirical evidence, thenature and degree of skill involved inthe game.

And there’s the rub. As Cabot notes in apair of excellent summaries, the difficul-ties with the decision on whether pokeris a game of skill or chance include thefact that many variants of the gameexist, and different forms of poker havedifferent levels of skill and chance2.

Further, there are various components ofskill elements, including: mathematics,psychology, assessing competition, read-ing hands, recognizing tells, exploitingposition, and money management.

As an example, the difference in skilllevels between video poker and TexasHold ‘Em is significant. Skills such aspsychology, assessing competition,reading hands, recognizing tells,exploiting position, and money man-agement are absent in video poker.

Despite these difficulties, whether agame is predominately skill or chance isa question of fact, and a judge (or jury)needs to weigh all the evidence present-ed to decide.

The evidence, according to Cabot, needsto come in the form of expert testimonythat proves mathematically various levelsof skill or chance involved in the game.

Skill Games and Tax LawThe extent to which skill can be appliedin a gambling game also arises in animportant way in tax law. In 1985, theU.S. Supreme Court ruled inCommissioner of Internal Revenue v.Groetzinger that professional gamblersmay be considered as being in a trade orbusiness for tax purposes, just like anyother business.

Because of Groetzinger, professional gam-blers are now considered to be in thebusiness of gambling and may, by virtueof Section 162 of the Internal RevenueCode (1954), deduct from gross incomeall ordinary and necessary expensesincurred in a business and, underSection 212, in the production or collec-tion of income.

A corollary rule, embodied in Section165, permits deduction of losses sus-tained in a trade or business, or in atransaction entered into for profit.

Thus, a professional gambler can reporthis gambling gains and losses onSchedule C, the net gain or loss to bereported on Form 1040 prior to arrivingat an adjusted gross income.

For some gamblers, filing in this way —as a professional gambler — rather thanreporting winnings as income anddeducting losses (to the extent of gains)as an itemized deduction will work totheir benefit.

The catch here, of course, is how onequalifies as a professional gambler in theeyes of the IRS, and this is where skill,among other factors, comes into play. InGroetzinger, key ingredients in theSupreme Court’s ruling the taxpayer —who spent sixty to eighty hours perweek studying and betting on dog racesfor most of the year after having lost hisjob — to be in the trade, or business, ofgambling (despite having lost moneythat year gambling) were the taxpayer’sdevotion to the activity, that his pri-mary purpose for engaging in the activ-ity was for income or profit, and theincorporation of skill.

The Court specifically noted “skill wasrequired and applied.” Indeed, it is diffi-cult to argue that engaging in a gam-bling activity for income or profit canbe undertaken without exercising sometype (or several types) of skill.

Put another way, if one accepts rationaland reasonable circumstances, one cangamble for profit when gambling entails apositive mathematical expectation; if oneaccepts all games in which a player canobtain an advantage requires skill, thenthe inescapable conclusion is that skill isnecessary for professional gamblers.

Determining Whether Skill orChance PredominatesThe authors of a 2001 exposition onmachine games of skill argue that a dif-ference between a (machine) game of skilland one of chance is that in a true gameof skill, a player’s decisions affect theoverall return3. Put another way, one canplay a game of skill either well or poorly.

Playing well receives a higher return thanplaying poorly. In video poker, for exam-ple, there is a correct decision for keepingdealt cards. Making correct decisions willlead to a higher return than makingwrong decisions. Optimal strategy (mak-ing the correct decision every time) leadsto the highest possible return.

This is the same idea behind basic strate-gy in blackjack, Caribbean stud poker,and most other games involving skill. Forthese games, a decision affecting theoverall return (or house advantage) ismade during the course of play. There areother games, such as sports and race bet-

2 “A Game of Skill or Chance? And Why It Makes a Difference,” Parts I and II, PokerBIZ, Vol. 1, Nos. 2 and 3, 2005.

3 Levenson and Gross. “Now Playing: Reel Games of Skill”,International Gaming and Wagering Business, July 2001.


ting, where the decision affecting theoverall return is made prior to the wager.

Nonetheless, the skill element is presentin the handicapping or mathematicalmodeling attendant to the successfulsports or race bettor. In this light, onemight attempt to argue craps is a gameof skill since, like sports and race bet-ting, the decision as to which bets tomake will affect the overall return.

This, of course, is nonsense. Ignoringalleged dice control-type activity — per-haps generously put, the jury is still outon this — craps is not a game of skill.Mere knowledge of the well-knownhouse advantages associated with thedifferent types of craps bets does notconstitute skill.

One way to address the relative weightof skill versus chance in a game is tocompare the fates of “skilled” and“unskilled” players. If a game is one ofpure chance, the expected outcome willbe the same and random plays shouldfare as well in the long run as thoseincorporating skill.

On the other hand, if skill predominatesover chance, skilled players should dev-astate random (unskilled) players in thelong run. How long the long run is willvary depending on the relative impor-tance of skill versus chance in the partic-ular game or game variant. In games suchas chess, backgammon, and billiards, totake a few examples where skill clearlypredominates, the expert will crush thenovice in virtually every match.

At the other extreme, anyone can out-perform anyone else in any given handat roulette (assuming an honest game);roulette is a game of pure chance. Onecannot be an expert or skilled roulette

player. In other games, an unskilledplayer may beat the skilled player in theshort term, but if skill predominates, theskilled player will beat the unskilledplayer over time. This is the case forpoker. Almost anyone can win a singlehand, where superior cards can carry thehand, but in the long run the cards willeven out and the skilled poker playerwill win the money.

In principle, it appears simple to assessthe relative weights of skill and chancein a gambling game. One must observeand compare expected outcomes ofskilled and unskilled players. Yet, inpractice, designing and executing such astudy may be problematic.

Likewise, the standard of proof in thesecases has confused courts. For example, inBell Gardens Bicycle Club v. Department ofJustice4, the appellate court reversed a trialcourt determination that a jackpot fea-ture to a poker game was a game of skill. The court rightfully criticized the trialcourt for relying on the testimony of an

expert witness who was a law professorand admittedly not a skilled poker play-er. This witness provided no statisticalanalysis when a testimony from askilled player and a professor of mathe-matics would have been beneficial.

Other difficulties are obvious. Judgeswho play the game have a higher degreeof understanding than judges who fail tosee beyond card shuffling or playing thelast card on the last hand. For example,one can assume that the judge in a caseinvolving billiards was familiar with thegame when he noted: “[b]illiards andpool are not games of chance. If any one[sic] thinks they are, let him go and playthem for a stake, and he will promptlydiscover his error.”5

ConclusionWhether skill predominates over chancedepends on the effect of players’ deci-sions on the overall expected return, orits counterpart: the house advantage.Whether the difference between theexpected return is significant enough is amatter for the courts; in some cases, it isclear.

One would like to think the questioncan be reduced to mathematics, buteven that depends on the usual stan-dard of proof the law likes to invoke. Incertain instances it not easy to deter-mine this effect. An important compo-nent is the difference in the overallexpected return (or house advantage), avalue that in some cases can be estimat-ed with an appropriate statistical study.

4 36 Cal.App.4th 717, 42 Cal.Rptr.2d 7305 State v. Stroupe, 76 S.E.2d 313, 316, N.C. 1953

In games involving skill,

factors such as knowledge,

judgment, learning,

decisions, strategies,

expertise, experience,

physical abilities, or other

such influences, can affect

the likely outcome.

n:Skill versus Chance

skill n.: Proficiency, facility, or dexterity that is acquired or developed through training or experience.

chance n: The unknown and unpredictable element in happenings that seems to have no assignable cause.

Source: Webster’s Online Dictionary, http://www.m-w.com


Fierce CompetitionThe Syndicat des Casinos Modernes, one ofthe main bodies representing the interestof France’s casino sector, has recentlylodged a complaint to the EuropeanCommission’s Directorate General forCompetition against the French Stateand the Française des Jeux, on grounds ofabuse of a dominant position (article 86of the EC Treaty read in conjunctionwith article 82).

In past years, the French casino sector hasfaced fierce competition from the localmonopoly. Since 2001, the Française desJeux has been solely authorized by theFrench State to offer online gamblingservices in France by virtue of its owninternal rules.

The French monopoly has been expand-ing its offer, providing online casino-likegames — with names such as “blackjack”and “roulette” — in violation of theEuropean Court of Justice requirement of“consistent gaming policy” set out in thefamous Gambelli1 ruling.

The French casino sector has been unsuc-cessfully lobbying French authorities foryears to obtain the right to offer serviceson the Internet, just as their European andnational counterparts currently do.

The French casino legislation is indeedoutdated and unfit for today’s virtualindustry, as it partly dates back to thebeginning of the twentieth century.

Many serious studies have shown theFrench casino industry’s growth has beenslowing down compared to growth registered by the Française des Jeux and theonline casino industry.

Recently, the Syndicat des Casinos Modernesasked the French Prime Minister to annulnational provisions granting the exclusiveright to offer gambling services to theFrançaise des Jeux.2

A refusal by the French government couldtrigger a parallel national judicial action in

front of the highest administrative court,the Conseil d’Etat, which is likely to giverights to the casino sector. In May 2000,the High Court expressed its concernsregarding the ever-expanding offers of theFrançaise des Jeux by citing the EuropeanCourt of Justice case-law.

Six years later, with the Française des Jeux’sonline exclusivity, the High Court shouldbe showing even more concern.

Legal BasisArticle 86 of the EC Treaty states “in thecase of public undertakings and under-takings to which Member States grantspecial or exclusive rights, Member Statesshall neither enact nor maintain in forceany measure contrary to the rules contained in [the] Treaty, in particular tothose rules provided for in Article 12 andArticles 81 to 89.”

The Française des Jeux, as a public under-taking in a monopoly situation (theFrench State holds a 72 percent share inthe company), undisputedly enjoys adominant position on the offline lotteryand sports betting market.

This status allows the organization toabuse its dominant position on the emerging and booming online gamblingmarket, which encompasses all the gambling industry can offer: lotteries, betting, casino games and much more.

The abuse consists of:• an extension to the monopoly’s dominantposition to the online market, underpermission of the French authorities;

• subsequent discrimination toward casinooperators established in the EuropeanUnion and the Française des Jeux, despitethe fact they are both situated on the samemarket; i.e. the online gambling market;

• eliminating or weakening competition on a neighboring market; i.e. the online gambling market.

Commission decisions and European

Court of Justice case-law prohibit a firmfrom enjoying a dominant position to discriminate in favor of its own activitieson a neighboring market.

Moreover, other secondary law instru-ments, such as the Directive on competitionin the markets for electronic communicationsservices, stated the following: “MemberStates shall take all measures necessary toensure that any undertaking is entitled to provide electronic communicationsservices or to establish, extend or provideelectronic communications networks.”

As the European Court of Justice has decided, under article ten of the EC Treaty,Member States have a duty to ensure fulfillment of obligations arising out of theTreaty. Furthermore, they must not acceptor create any measures which could jeopardize the attainment of the objectivescontained therein.

One of these objectives, stated in articlethree (g), ensures competition in the internal market is not distorted.

The Commission has thus been asked bythe Syndicat des Casinos Modernes toaddress all appropriate measures:

• The French State, which grants themonopoly to the FDJ through legislation(article 17 of a 1978 Act);

• The FDJ, which can end its abusive conduct by amending its internal rules.

Market ImpactTraditionally, casino games and othergames such as lotteries and betting—which are offered exclusively in Franceby the Française des Jeux—belong to different markets.

The French competition authority considers, based on supply-side substitution,that casino games, lotteries, and sports

French Casinos vs. Francaise des Jeux:the War for Online Gambling

By Thibault Verbiest

1 The Gambelli Judgement (Case C-243/01), November 6, 2003 by Tribunale di Ascoli Piceno, Italy

2 Article 17 of the 1978 Act granting exclusivity to the Française des Jeux


betting are not interchangeable. For example, traditional lottery games areavailable throughout French territory;whereas, casino games are restricted to certain (thermal) regions.

The distinction between casinos andgames offered by the Française des Jeux restson geographical criteria, which no longermakes sense when applied to the Internet.Its de facto cross-border character preventsgeographical restriction, since all games arenow available through the same distribu-tion channel.

This explains why community law andjurisprudence do not distinguish betweendifferent types of gambling services, butrefers to “gambling activities whichinvolve wagering a stake with pecuniaryvalue” (e.g, Commission proposal for adirective on internal market services and e-commerce directives, in the Schindler,Zenatti, Gambelli rulings of the EuropeanCourt of Justice).

A French Senate report from 2001 (theTrucy report) has pointed out that the evolution of the gambling sector, character-ized by a certain number of convergences, islinked to increasing competition and the useof modern technologies.

Indeed, online gambling operators con-verge ever more towards a one-stop-shop,an expression used in a comprehensivestudy conducted by Deutsch Bank on theonline gambling industry. To put it simply,today, online bookmakers offer classic-sports betting services as well as casinogames (and more).

This fact is even confirmed by the EuropeanLotteries Association, which represents allthe national lotteries in Europe.

When considering demand-side substitu-tion, the traditional criterion used by theEuropean Commission for the sake of mar-ket definition, it is striking to see playerson the Française des Jeux website now haveaccess to lotteries and casino games,switching easily from one to another.

Other factors such as online payment andregistering, game rules and names, visualpresentation, wagers, profit, and elementsof chance explain why games offeredonline are interchangeable in the eyes ofthe consumer. If players are wageringsmaller amounts of money online asopposed to offline, the addiction risks arethe same whether playing a Française desJeux lottery or a Casino-on-net game.

What Next?It is high time French authorities acknowl-edged casino operators’ current situationwhen confronted by the French market,which distorts competition and harmsinternal market achievement.

This acknowledgment would be bestshown by abrogating the relevant provi-sions of the 1978 Act, which grants amonopoly to the Française des Jeux, and/orby amending its internal rules whereby theFDJ is exclusively allowed to offer onlinegambling services to French citizens.

Alternatively, the French government shouldallow an online casino licensing regime available to all fit and proper operators.

If both the French State and the Françaisedes Jeux fail to act, the EuropeanCommission should fully play its role asguardian of the Treaty by investigating thecomplaint lodged by the Syndicat desCasinos Modernes.

Thibault Verbiest obtained his law degree atthe University of Brussels and has advanceddegrees in Economic Law (University ofBrussels) and in International EntertainmentLaw (University of San Diego). He is a lawyerin information technology and a senior partner with ULYS, a firm based in Brusselsand Paris. He can be reached at [email protected].

If both the French

State and the

Française des Jeux

fail to act, the

European Commission

should fully play

its role as guardian

of the Treaty by

investigating the

complaint lodged

by the Syndicat

des Casinos Modernes.

The Gambelli Ruling

On March 30, 2001, Tribunale diAscolo Piceno, Italy, ordered againstPiergiorgio Gambelli and 137 othersprohibiting unlicensed betting out-side member states.

The law indicates a bettor will beprosecuted during “the pursuit ofthe activities of collecting, taking,booking and forwarding offers ofbets, in particular bets on sportingevents, without a license or author-ization from the Member State . . .”

After Gambelli solicited a Britishbookmaker to corroborate in betcollecting, the case ruled Gambelli’sactions unlawful.

Stanley International Betting Ltd, abookmaker who operates bettingtracks legally across the EuropeanUnion, established fixed nationaland international sporting bets withGambelli.

What the group failed to under-stand when they collaborated, how-ever, was the collection of foreignbets had created, according to thecourt ruling, “a network of opera-tors who have invested capital andcreated infrastructures in the gam-ing and betting sector.”

In other words, Gambelli andStanley covertly started a gamingmonopoly within Italy without thegovernment’s consent.

While Gambelli and Stanley hopedto tap into the well-established Stategambling monopoly, they were cutshort after Italian legislation reiter-ated its policy protects “licenseesunder the national monopoly bymaking that monopoly impenetra-ble for operators from other member states.”

Many countries acknowledge theGambelli ruling, including:Belgium, Finland, France, Greece,Italy, Luxembourg, Portugal andSpain.


The online gaming industry and its regulation, both barely ten years old,have evolved at an incredible pace. In1994, Antigua was the first jurisdiction

to offer licenses to the online gaming operators. For the next

several years, Antigua andvarious other Caribbeannations were favored

locations for the industry.

Regulation was either non-existent or consisted principallyof issuing a permit with few, if

any, probity requirements. Inmore recent years, under new

leadership in its gaming division,Antigua has made diligent efforts toestablish and implement more effectiveregulation.

Australia was the first tier one jurisdic-tion to attempt to regulate online gaming, but after a flurry of studies andlegislative activity in the late 1990’s, Ozfolded its hand and essentially left thetable. To date, there has been little activity in the online gaming industryfrom Australia.

In 1996, Canada made a half-heartedattempt to amend its Criminal Code toinclude a specific provision providingfor regulation of online gaming by thefederal government. The amending billdied on the order paper as a result of afederal election in 1997 and has neverbeen resuscitated.

In the meantime, the MohawkTerritory of Kahnawá:ke — situatedwithin Québec, Canada — has beenconsistently regulating online gaming

Keeping an Eye on i-Games:eCOGRA and eGAP Mandate Fair Conduct

By Murray Marshall


since July 1999 on the basis of their own aboriginal jurisdiction. TheKahnawá:ke Gaming Commission, recognized as a world leader amongInternet gaming regulators, has regula-tions which are generally acknowl-edged as benchmarks for effectivelyregulating i-gaming space.

Presently, almost 80 licensing jurisdic-tions around the world offer a licensingregime for Internet gaming. Most aresmaller countries and territories such asKahnawá:ke, Malta, Gibraltar, Isle ofMan, and Alderney, with more onlineevery year. Regulatory approaches havetended to range from excessive to non-existent.

However, regulatory models change frequently. Change is driven by a number of considerations: new technologies (such as P2P and broadband); shifts in the industry itself(for example, the enormous popularityof online poker gave many operators a new lease on life); and recently, agrowing sense of competitivenessbetween jurisdictions which are all seeking to grow their share of the i-gaming market.

There have been a number of recentdevelopments indicating change is inthe wind for online gaming regulation.

The Isle of Man, which had previouslymaintained a very strict approach toregulating i-gaming, announced inJanuary 2006 that it had significantlyamended its legislation, particularly inrelation to software testing, disasterrecovery provision and advertising andmarketing — all designed to create amore welcoming environment forInternet gaming operators. Around thissame time, Gibraltar also announcedthey would create a comprehensive reg-ulatory framework for Internet gamingregulation within their jurisdiction.

With the enactment of the GamblingAct of 2005, the United Kingdom hasbecome the biggest player to wade intothe licensing fray. Although the Actallows for licensing and regulatingremote gambling operators, manyimportant details — including the all-important questions on taxation —have yet to be clarified.

In the meantime, apparently seeking toemulate the dubious successes of the1920’s prohibition on alcohol, U.S. legislators have struggled to prohibit,

rather than regulate, the online gamingindustry. Despite a string of failed bills,recent initiatives by Senators Kyl andGoodlatte seem to be gaining momen-tum and may finally establish a U.S. banon online gaming. However, such a ban,even if enacted, will not target U.S. punters, who still represent the bulk ofthe online gaming market.

Added to regulatory mix is eCOGRA, a non-governmental, non-profit mem-bership organization whose mandate isto “protect players by addressing theneed for fair gaming and responsibleoperator conduct.” Although initiallyviewed by some as an organizationthat potentially usurped the tradition-al role of governmental regulators,eCOGRA and its eGAP standards havebeen gaining industry credibility. Infact, the Kahnawá:ke tribe recentlysigned a protocol with eCOGRAacknowledging the suitability ofeCOGRA’s standards — and other jurisdictions are in similar discussions.

As the industry has grown and matured,regulating jurisdictions have recognizedthe need to develop a model that will

replace the existing global patchworkwith standards that are consistently andpredictably applied by all regulatingjurisdictions.

Over the past three years, theInternational Association of GamingRegulators (IAGR), assisted by suchgroups as the International Masters ofGaming Law (IMGL) and the InteractiveGaming Council, has played a leadingrole in bringing online gaming regula-tors from around the world together forthe purpose of developing a globalindustry standard.

In this same spirit of cooperation,some jurisdictions have signed memo-randa of understanding, which allowsharing of information to assist inrespective due diligence processes, andwhere necessary, joint enforcement ofregulatory provisions. Such agree-ments already exist between Isle ofMan, Malta, and Gibraltar; in addition,one was recently inked between theKahnawá:ke and Antigua.

This is clearly a step in the right direction, and as the outline of a globalregulatory model comes into sharperfocus, like-minded jurisdictions willlikely consider more comprehensiveagreements, providing for a greaterdegree of reciprocity and mutual recognition.

Given the global nature of industry,these developments in the regulatoryworld are clearly desirable for operators seeking a greater degree ofcredibility in an industry that oncehad dubious regulatory status. It is alsogood news for players, who can beconfident their favorite online gamingsite is effectively regulated.

Murray Marshall has served as legal coun-sel to the Mohawk Council of Kahnawá:kesince 1993. He has also been counsel to theKahnawá:ke Gaming Commission since itsinception in 1996. Presently, Mr. Marshallis a partner with the law firm, MarshallSokolyk, Barrister & Solicitors ~ Avocats,which maintains offices in Alberta andQuebec, Canada. He can be reached [email protected].

Given the global

nature of the industry,

these developments

in the regulatory

world are clearly

desirable for operators

seeking a greater

degree of credibility

in an industry that

once had dubious

regulatory status.


International Masters of Gaming LawPresident Michael Lipton recentlyremarked that those of us who work andpractice in gaming are pioneers. A studyon the effects of 200 new slot machinesin Belleville, Ontario, scheduled to commence in September 2006, may alsobe described as breaking new ground, asfindings of this study will offer a rareglimpse into the long-term benefits andpitfalls of electronic gambling.

The city of Belleville1, known as theFriendly City, is located about 1.5hours east of Toronto, on the Bay ofQuinte. International hockey legendBobby Hull is a Belleville boy whomade it big by excelling at Canada’snumber-one sport: hockey. Canada’snumber-two sport, however, appears tobe electronic gambling.

In January 2005, the Ontario Ministryof Economic Development and Tradeannounced plans to introduce slotmachines at the new Quinte Exhibitionand Raceway (QER) in Belleville.

The QER is projected to open the summer of 2007; 200-450 slot machines

will be included in the new venue.Based on other slot machines at Ontarioraceways, annual revenue from the QERis anticipated in the range of $26 million (for 200 machines) and $58 mil-

lion (for 450 machines). Belleville willreceive five percent of the QER annualrevenue as the host municipality.

The Ontario government approved theslots-at-racetracks program in 1998 andsince that date Ontario’s racing andgaming industry has experiencedtremendous growth. There are currently18 existing government-approved racetracks in Ontario. The QER is thelast racetrack to be given the Ontariogovernment’s blessing to place slotmachines trackside.

In March 2006, the Ontario ProblemGambling Research Centre2 (OPGRC)announced it retained a Canada-basedteam to conduct a groundbreaking, five-year study that will examine the impact ofthe new slots. Since the QER will possiblybe the last new gambling facility inOntario, it offers a unique opportunity tostudy the accompanying impact on peoplewho gamble and the community at large.

Breaking New GroundCanada-Based Team to Conduct Study on Gambling

By Laura A. Ward

“This is the first

study in the world

to undertake such

a comprehensive,

longitudinal examination

of the changes in a

community when a

gambling facility is

introduced.” – Ron Frisch,

OPGRC Board Chair.1 Population about 46,000 (based on the 2001 census).

2 A centre created by the province to track the effects of gambling expansion in Ontario.


“This is the first study in the world toundertake such a comprehensive, longi-tudinal examination of changes in acommunity when a gambling facility isintroduced,” Ron Frisch, OPGRC BoardChair said. The goal of the study is todetermine social and economic benefitsand costs of slot machine introductionto QER and the role of individual, familial, societal, and structural variables in mediating these impacts.

The cohort sample will be recruited bymeans of random digit dialing (RDD)3

over six months, from September 2006to February 2007. It will consist of 4,000adults (18+ years of age) living within70 km of Belleville (with approximatelytwo thirds living within 35 km of theBelleville City Centre).

Furthermore, 3,000 adults will consti-tute the general population sample4 and1,000 adults will constitute the at-risksample5.

Baseline assessment sessions will occurbetween September 2006 and February2007, and participants will sign aninformed consent and complete a 140minute self-administered baselineassessment via computer with touch-screen responding.

Following the baseline assessment,there will be six assessment periods,each three months in duration, andeach scheduled nine months after the

previous one. The first of these assessment periods will begin withinone month after the slot machineshave been introduced to the QER(September 2007).

During each assessment period, participants will record any significantlife events/changes and/or changes ingambling behavior in a paper diary oran online journal (available on theproject website).

At each assessment session (i.e. at the end of each assessment period), participants will complete the assessment, submit their diary for thatperiod, receive a new diary, and receivecompensation6.

The $3.1 million earmarked for thestudy will be drawn from $36 millionthe Government of Ontario providesannually for prevention and treatmentof gambling addiction. The money istaken from billions of dollars theGovernment of Ontario receives fromcasino, slots, and lottery ticket sales.

The long-term nature of this researchstudy is pioneering. The findings of thisstudy will have the potential to advancethe general field of gambling research andwill provide those who work and practicein gaming with information to steer theindustry in the right direction.

Laura A. Ward is an associate and memberof the gaming law group of Elkind & LiptonLLP in Toronto, Ontario Canada. She canbe reached at [email protected].

• direct employment changes as a result of slot machine introduction;

• employment levels for industries in the region most typically affected by the introduction of new gambling establishments;

• general rates of unemployment and welfare for the region;

• QER revenue;

• origin and cost of supplies and servicing for the QER;

• disposition of gambling revenue;

• revenue in industries in the region most typically affected by the introduction of new gambling establishments;

• change in actual number of businesses in the sectors most typically affected by the introduction of new gambling establishments in the region;

• gambling patronage;

• taxation changes in the region;

• direct government gambling revenue;

• infrastructure costs in the region;

• community property values for the region;

• community rental cost rates for the region;

• utilization rate of this new form of entertainment;

• general populace attitudes concerning the introduction of the QER and of gambling generally;

• crime rates by category in the region;

• changes in problem gambling prevalence rates in the region;

• changes in treatment provision for problem gambling in the region;

• personal and commercial bankruptcy rates in the region;

• suicide rates in the region;

• divorce rates in the region;

• direct reports from problem gamblers concerning the financial, psychological, familial, employment, legal and health impactsof their gambling; and

• individual characteristics mediating impacts.

3 Random Digit Dialing (RDD) is a sample selection method that often involves a computer-generated random sample of telephone numbers. Every household with telephone service, within a pre-determined geographical or demographical area, has a chance of being contacted.

4 The purpose of the general population sample is to establish the general nature of the various short and long-term socioeconomic impacts of the new slot machines on Belleville area population, the magnitude of these impacts, and the particular subpopulations mostaffected as a function of their demographic characteristics: proximity, gambling history, problem gambling status, attitudes, personal attributes (e.g., personality, psychopathology, intellect, health), stress, and social functioning/supports.

5 People are considered at risk if they answer “sometimes” (or more frequently) to any of the three most commonlyendorsed Canadian Problem Gambling Index (CPGI) questions: have you bet more than you can afford to lose?; when you gambled, did you go back another day to try to win back the money you lost?; and have you felt guilty about the way you gamble or what happens when you gamble?

6 Payment will be: $50 for the baseline assessment, $30 forthe second assessment, $30 for the third, $35 for the fourth, $40 for the fifth, $40 for the sixth and $50 for the seventh.

The findings of this

study will have the

potential to advance

the general field of

gambling research and

will provide those

who work and practice

in gaming with

information to steer the

gaming industry in

the right direction.

Data (before and after the scheduled opening of the QER) will be collected throughout the study for the following variables:


Legal pari-mutuel1 betting was availableat approximately 184 horse racing ven-ues in 37 state jurisdictions throughoutthe United States in 2005.2 Between 1989and 2003, the number of thoroughbredraces declined from approximately74,000 in 1989 to about 54,000 in 2003,yet the amounts wagered on thorough-bred races increased from approximately$14 billion to approximately $16 billionduring the same period.3

“Account Wagering,” or advanceddeposit wagering4 (ADW), “is the fastest-growing part of the business by a signifi-cant margin,” Greg Avioli, Executive VicePresident of the National ThoroughbredRacing Association, said. Avioli predictedADW to hit $3 billion in 2005.5

Wagering by bettors in person at horsetracks has declined from approximately$9 billion in 1989 to approximately $2.5billion in 2002, while wagers placed bybettors in person at other race tracks andoff-track betting shops (commonlyknown as “simulcasting”), and wagersplaced by bettors remotely via telephoneor Internet (i.e., account wagering)increased from approximately $5 billionin 1989 to $13.5 billion in 2002.6

Account wagering on horse racing viatelephonic means has been conducted inthe United States for over 30 years. OnApril 8, 1971, the New York City Off

Track Betting (OTB) opened itsTelephone Betting Center with approxi-mately 3,000 ADW accounts.7

Account wagering via the Internet is amore recent phenomenon. Oregon wasthe first U.S. state to legalize ADW hubs.Under Oregon law, “[a]ccount holdersmay communicate instructions concern-ing account wagers to the [ADW] hub inperson, by mail, telephone, or electronicmeans.”8

Oregon issued its first ADW hub licensein 1999 to a joint venture involving the National Thoroughbred RacingAssociation and a subsidiary of GemStar-TV Guide International, Inc. Total wagersaccepted by Oregon ADW hubs havegrown from approximately $20 millionin 2000 to almost $1 billion in 2005.Currently, three of the six Oregon ADWhubs are owned and operated by entitiespublicly traded on U.S. stock exchanges.9

In December 2000, concurrent withrapid growth in account wagering onhorse races utilizing cellular phones andother electronic means, Congressamended the definition of “interstateoff-track wager” in the Interstate HorseRacing Act of 197810 (the “IHA”) –despite strong opposition by the U.S.Justice Department – so that IHAexpressly includes placement or trans-mission of pari-mutuel wagers via elec-tronic media (i.e., via the Internet) as a

permitted means of placing or transmit-ting bets and wagers on horse races inthe United States.11

The language of IHA, as amended, isclear: betting on horse racing viaInternet is permissible. The legislativehistory of IHA amendment supports theconclusion. Congressman Frank R. Wolf(R-VA) stated the IHA amendment would“codify the legality of placing wagersover the telephone or other electronicmedia like the Internet.”12

By expressly permitting bets and wagersplaced or transmitted via the telephoneand other electronic media under IHA,Congress created an irreconcilable con-flict between IHA, a civil statute, and the1961 Wire Communications Act13 (the“Wire Act”), a criminal statute.

The Wire Act clearly prohibits use of wirecommunications by persons “engaged inthe business of betting or wagering” inthe transmission or placement of “betsor wagers or information assisting inplacing bets or wagers on any sportingevent or contest.”14

When President Bill Clinton signed theIHA amendment into law, he acknowl-edged the view taken by the U.S.Department of Justice (the DOJ) inregards to the conflict between the twofederal statutes:

The Implied Partial Repeal of the Wire Act

By Ben Hayes

1 For purposes of this article, the terms “pari-mutuel wager” or “pari-mutuel wagering” means: any system whereby wagers with respectto the outcome of a horserace are placed with, or in, a wageringpool conducted by a person licensed or otherwise permitted to doso under State law, and in which the participants are wagering witheach other and not against the operator.

See 15 U.S.C. 3002(13).

2 American Horse Council, 2005 Horse Industry Directory: Pari-Mutuel Racetracks, at p. 54-59 (2005).

3 NTRA Wagering Systems Task Force, Declining Purses and TrackCommissions in Thoroughbred Racing: Causes and Solutions, atExhibit 1 – Total Number of U.S. Thoroughbred Races (1980-2003)(2004).

4 ADW is a form of pari-mutuel wagering that enables an accountholder to utilize all or a portion of the balance in an ADW accountto fund the placement of a pari-mutuel wager.

5 William Spain, “Plan Could Cripple Net Horse Betting,”MarketWatch, May 24, 2005, athttp://www.marketwatch.com/news/yhoo/stoy.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B8EC9ED82%2DFBEE%2D431D%D9681%2D2F474A49BD71%7D.

6 NTRA Wagering Systems Task Force at Exhibit 7a.

7 New York City OTB web site athttp://www.nycotb.com/viewPage.cfm?pageld=18 (2005).

8 Oregon Administrative Rule 462-220-0060(2).

9 The publicly-traded ADW hubs are as follows:

Magna Entertainment Corp., traded on NASDAQ under theacronym MECA, operates two ADW hubs. One is a “United Statesnational account wagering business known as XpressBet®, whichpermits customers to place wagers by telephone and over theInternet on horse races at over 100 North American racetracks andinternationally on races in Australia, South Africa and Dubai” andthe other is a European ADW hub known as “MagnaBet™.” MagnaEntertainment Corp., SEC Form 10-Q (Commission File No. 003-30578), May 10, 2005, at 17. Magna’s ADW nub, XpressBet®, is currently licensed by the State of Pennsylvania.

Youbet.com, Inc., traded on NASDAQ under the acronym UBET, has“focused on the United States Pari-Mutuel horse race wagering mar-ket through its main product, Youbet Express™, which featuresonline wagering, simulcast viewing, and in-depth, up-to-the minuteinformation on horse racing. Youbet’s customers receive interac-tive, real-time audio/video broadcasts, access to a comprehensivedatabase of handicapping information, and in most states, the abili-

ty to wager on a wide selection of horse races in the United States,Canada, Australia, South Africa, Hong Kong, and the UnitedKingdom.” Youbet.com, Inc., SEC Form 10-Q (Commission FileNO. 0-26015), May 4, 2005, at p. 10-11. Youbet’s ADW hub is cur-rently licensed by the State of California, State of Oregon and theState of Washington.

GemStar-TV Guide International, Inc., traded on NASDAQ underthe acronym GMST, states that it “derives a substantial portion ofits revenue from Pari-Mutuel wagering…[through] TVG Network’sInternet-based horse race [account] wagering operations…”GemStar-TV Guide International, Inc., SEC Form 10-Q (CommissionFile No. 0-24218), May 5, 2005, at p. 31. The GemStar ADW hub isknown as TVG™, which is licensed by the State of Oregon.

10 Interstate Horseracing Act of 1978, Pub. L. 95-515, § 2, 92 Stat.1811, codified at 15 U.S.C. §§ 3001-3007.

11 District of Columbia Appropriations Act of 2000, Pub. L. No. 106-553 § 629, 114 Stat. 2762, 2762A-108 (codified at 15 U.S.C. §3002(3)).

12 146 Cong. Rec. H 11230, 11232, 106th Cong. 2nd Sess. (2000).

13 18 U.S.C. § 1084.

14 Id.

The Department of Justice, however,does not view this provision as codifyingthe legality of common pool wageringand interstate account wagering evenwhere such wagering is legal in the various States involved for horseracing,nor does the Department view the provision as repealing or amendingexisting criminal statutes that may beapplicable to such activity, in particular,[the Wire Act] . . . .15

This article examines the issue ofwhether IHA, as amended, conflictsirreconcilably with the Wire Act, in thatby enacting IHA and its amendment,Congress clearly manifested an intent tospecifically permit transmission, place-ment, and acceptance of bets and wagerstelephonically and via other electronicmeans.

This article also examines whether IHA,contrary to the view taken by the DOJ,implicitly repeals the Wire Act withrespect to the limited area of pari-mutuelbetting and wagering on horse races viatelephonic and electronic means.

The Wire ActSubsection (a) of the Wire Act says:Whoever being engaged in the businessof betting or wagering knowingly uses awire communication facility for thetransmission in interstate or foreigncommerce of bets or wagers or informa-tion assisting in the placing of bets orwagers on any sporting event or contest,or for the transmission of a wire com-munication which entitles the recipientto receive money or credit as a result ofbets or wagers, or for information assist-ing in the placing of bets or wagers, shallbe fined under this title or imprisonedno more than two years, or both.16

The term “wire communication facility,”as used in the Wire Act, is defined as:Any and all instrumentalities, personnel,and services (among other things, thereceipt, forwarding, or delivery of com-munications) used or useful in the trans-mission of writings, signs, pictures, andsounds of all kinds by aid of wire, cable,or other like connection between thepoints of origin and reception of suchtransmission.17

Subsection (b) of the Wire Act containstwo exceptions, also known as the “safeharbor” clause: Nothing in this sectionshall be construed to prevent the trans-mission in interstate or foreign com-merce of information for the use in news

reporting of sporting events or contests,or for the transmission of informationassisting in the placing of bets or wagerson a sporting event or contest from aState or foreign country where bettingon the sporting event or contest is legalinto a State or foreign country in whichsuch betting is legal.18

Subsection (c) of the Wire Act providesthat nothing contained in the provisionsof the Wire Act shall create immunityfrom criminal prosecution under anystate laws.

Interstate Horseracing Act (IHA)Congress enacted IHA “to further thehorse racing and legal off-track bettingindustries in the United States.”19

Generally speaking, IHA provides aninterstate off-track wager20 may beaccepted by an off-track betting systemonly: with the consent of the appropri-ate host racing association,21 the host rac-ing commission,22 the off-track racingcommission,23 and nearby race tracks.24

Originally, an “interstate off-trackwager” was defined as “a legal wagerplaced or accepted in one state withrespect to the outcome of a horse racetaking place in another State.”25

Congress amended the definition of“interstate off-track wager” in December2000 to expressly include the Internet(i.e. other electronic media) as a meansof transmitting “pari-mutuel wagers.”

The 2000 amendment provides that thedefinition of “interstate off-track wager”now includes pari-mutuel wagers, wherelawful in each State involved, placed ortransmitted by an individual in one Statevia telephone or other electronic mediaand accepted by an off-track betting sys-tem in the same or another State, as wellas the combination of any pari-mutuelwagering pools.26

Because IHA is not a criminal statute,neither DOJ nor any other jurisdiction oragency may bring a criminal actionagainst an ADW hub for violation ofIHA.27 IHA permits only civil remediesbrought by the host State, the host rac-ing association or the applicable horse-man’s group with respect to violations ofthe Act.28

The first question regarding the federalWire Act examines whether or not horseracing constitutes a “sporting event orcontest.” The 1961 House Report, with

respect to the Wire Act, provides that,[I]n Nevada [it is] lawful to make andaccept bets on the race held in the stateof New York where pari-mutuel bettingat a racetrack is authorized by law.Therefore, the exemption will permit thetransmission of information assisting inthe placing of bets and wagers from NewYork to Nevada.29

The fact that the legislative historyspecifically addresses horse racing indi-cates Congress considered horse racingto be a “sporting event or contest” with-in the meaning of the Act.

Second, one must question whether theEOT’s activities fall within the Wire Act’s“safe harbor” provision. The language ofthe Wire Act contains an exemptionwhich provides that: Nothing in this sec-tion shall be construed to prevent thetransmission in interstate or foreigncommerce ... of information assisting inthe placing of bets or wagers on a sport-ing event or contest from a State or for-eign country where betting on thatsporting event or contest is legal into aState or foreign country in which suchbetting is legal.30

When interpreting a statute, a courtlooks first to the language of the statuteitself.31 For example, “Courts in applyingcriminal laws generally must follow theplain and unambiguous meaning of thestatutory language.”32 Or, “Only themost extraordinary showing of contraryintentions in the legislative history willjustify a departure from that language.”33

Therefore, to qualify for the above-refer-enced exemption, it must be establishedthat betting on the particular horse raceis legal in the jurisdictions from whichand into which the transmission ismade; and the transmission involves

15 5 U.S. Code & Cong. News, 106th Cong. 2nd Sess. 2457-2458(2000). See also William Clinton, Statement on Signing H.R. 4942,2001, http://www.mediaacess.org/programs/1pfm/wh2.html.(December 21, 2000).

16 18 U.S.C. 1084(a).

17 18 U.S.C. 1081.

18 18 U.S.C. 1084(b).

19 15 U.S.C. 3001(b).

20 15 U.S.C. 3003.

21 15 U.S.C. 3004(a)(1).

22 15 U.S.C. 3004(a)(2).

23 15 U.S.C. 3004(a)(3).

24 15 U.S.C. 3004(b)(1).

25 15 U.S.C. 3002(3) (1978).

26 District of Columbia Appropriations Act of 2000, Pub. L. No. 106-553 § 629, 114 Stat. 2762, 2762A-108 (codified at 15 U.S.C. §3002(3)).

27 GAO-03-89 Internet Gambling Overview at 43.

28 15 U.S.C. 3005 and 3006.

29 H.R. Report No. 967, 87th Cong., 1st Sess., (1961) reprinted in 1961U.S.C.C.A.N. 2631, 2632-33.

30 18 U.S.C. 1084(b).

31 Richardson v. United States, 526 U.S. 813, 818 (1999).

32 Salinas v. United States, 522 U.S. 52, 57 (1997).

33 Ibid.



information assisting in the placing ofbets or wagers on that subject matter.

Considering the Wire Act, another issueis whether betting on a particular horserace is legal in all applicable jurisdictions.

For purposes of this article, we assumeplacing wagers would comply with thefollowing requirements of 18 U.S.C. §1084(b): “from a State or foreign countrywhere betting on that sporting event orcontent is legal into a State or foreigncountry in which such betting is legal.”

We note in passing at least one court hasruled that if the betting or wageringactivities are legal in each of the applica-ble jurisdictions, then the activities fall“under the safe-harbor provision in §1084(b).”34 However, because of the par-ticular nature of that case, it is difficult togeneralize.

Also, it is important to understandwhether or not the Wire Act accepts thatADW involves “transmissions of infor-mation assisting in the placement of betsor wagers.” The Wire Act itself does notdefine what constitutes “transmissionsof information assisting in the place-ment of bets or wagers.”

Thus, a critical issue is whether activities ofthe ADW hub involve (1) transmission ofbets or wagers or (2) transmission of infor-mation assisting in the placing of bets orwagers. A plain reading of the statutorylanguage clearly includes an exception forthe latter, but not for the former.

From a practical standpoint, in the con-duct of account wagering, the bettor or“account holder” transmits his or herwagering instructions to the ADW hub(e.g. the bettor’s account number, thebettor’s password or PIN, the name of thetrack where the race is being performed[the “host track”], the race, the horse, thetype of bet, and the amount of the bet).

The ADW hub, in turn, records thewagering instructions it receives fromthe account holder and then enters thewagering instructions into a totalizedcommunications network, which pro-vides the wagering instructions to thehost track.

Upon receiving wagering instructions,the host track places wagering informa-tion into its pari-mutuel wagering pool,and recalculates and republishes odds foreach bet type for that particular horserace. The account holder will then be

deemed to have placed a pari-mutuelwager in the host track’s pari-mutuelwagering pool.

In a certain sense, therefore, the activi-ties of ADW hubs can be distinguishedfrom other Internet wagering operationssuch as “bookmakers,” sports books,35

and online casinos because ADW hubsdo not directly make or “book” the bet.

Furthermore, ADW hubs do not “holdthemselves out as being willing to makebets or wagers.”36 Rather, ADW hubs actas an agent, intermediary, a middle man,or “facilitator” of or for the transmissionof wagering information between thebettor and the host track.37

In essence, ADW hubs receive a trans-mission of wagering information fromtheir account holders, and ADW hubs inturn retransmit the wagering informa-tion to the host track.38 Depending oncircumstances, the host track may acceptor reject the transmission of the wager-ing information from the ADW hub and,as a result, the bet or wager of theaccount holder may or may not beplaced in the host track’s pari-mutuelwagering pool.

Thus, it certainly could be argued thatthe ADW hubs merely act as “middleman” or agent of the bettor by merelyassisting the account holder in the place-ment of bets and wagers through theADW hub’s reception and retransmissionof wagering information, rather thanactual transmission of bets and wagersthemselves.

The difficulty in making this argument,however, is that there is only one report-ed case which purports to interpret thephrase “information assisting in theplacement of bets or wagers.”39 In thatcase, the court distinguished betweentransmissions “necessary to effect a par-ticular bet or wager,” which do not fallwithin the 1084(b) exception, and“information that merely assists a poten-tial bettor or bookmaker,” which doesfall within the exception.40 The courtdetermined that information of the typewhich falls within the latter categoryincludes: knowledge that may influencewhether, with whom, and on what termsto make a bet... [such as] transmissionsreporting the results of sporting events,the odds placed on particular contests byodds-makers, or the identities of personsseeking to make bets.41

In the author’s view, it is more likely thata court would find the kind of wageringinformation transmitted by an accountholder to the ADW hub constitutesinformation necessary to effect a bet orwager rather than information merelyassisting a bettor or bookmaker.

Moreover, one must take into considera-tion whether or not the InterstateHorseracing Act repeals the Wire Act’sstance on Off-Track Wagering.

Even if ADW hub’s activities could bedeemed to be the “transmissions of betsor wagers,” and, thus, a technical viola-tion of the Wire Act, there is a questionas to whether the Wire Act even appliesin the first instance to interstate off-trackpari-mutuel wagers on horse races.

To begin this discussion, it is helpful tofirst address, in brief detail, the legisla-tive history of the Wire Act, the IHA,particularly the recent amendment tothe IHA, and other related legislationand activities.

Congress enacted the Wire Act in 1961 aspart of a package of bills aimed at pre-venting illegal gambling, racketeeringand organized crime. In furtherance ofthat goal, the stated purpose of § 1084was to: assist the various States and theDistrict of Columbia in the enforcementof their laws pertaining to gambling,bookmaking and like offenses and to aidin the suppression of organized gamblingactivities by prohibiting the use of wirecommunication facilities which are orwill be used for the transmission of betsor wagers and gambling information ininterstate and foreign commerce.42

34 Sterling Suffolk Racecourse Ltd. P’ship v. Burrillville Racing Ass’n,989 F.2d 1266, 1273 (1st Cir. 1993) (“The legislative history of sec-tion 1084 shows beyond peradventure that Congress enacted sec-tion 1084(b) for the express purpose of allowing off-track betting invenues where states chose to legalize such activity.”).

35 United States v. Cohen, 260 F.3d 68 (2d Cir. 2001); Also see Martinv. United States, 389 F.2d 895, 898 (5th Cir), cert. denied, 393 U.S.831 (1968).

36 See United States v. Ross, 1999 U.S. Dist. Lexis 22351, 13 (S.D.N.Y.1999) citing Sagansky v. United States, 358 F.2d 195, 200 (1st Cir.1966).

37 In United States v. Alpirn, 307 F. Supp. 452, 454 (S.D.N.Y. 1969),the court held that “Betting or wagering” involves “situationswhere the defendant was himself making or accepting bets direct-ly.” See also State ex rel. Reading v. Western Union Tel. Co., 57N.W.2d 537, 539 (Mich. 1953) (finding that no “gambling” tran-spired at a business that accepted money for bets and then placedbets with out-of-state bookmakers); Lescallett v. Commonwealth,17 S.E. 546, 548 (Va. 1893) (an order for an intermediary to placebets is not itself betting because the relationship was governed by aset fee); Chavis v. Commonwealth of Virginia, 1994 WL 43334 (Va.Ct. App. 1994) (order for an agent to purchase lottery tickets is nota bet or wager because no element of chance governs the relation-ship).

38 Several legal opinions regarding the legality of Account Wageringassert that ADW activities merely involve the transmission of“information assisting in the placing of bets and wagers” ratherthan the actual transmission of bets and wagers. SeeMemorandum of Law, Department of Justice, General CounselDivision, State of Oregon (December 21, 2000) at p. 4-6; and LegalMemorandum, National Thoroughbred Racing Association (1999)at p. 14-17.

39 United States v. Ross, __ F. Supp. 2d __, 1999 WL 782749 (S.D.N.Y.1999).

40 Ibid. at 5.

41 Ibid.

42 H.R. Rep. No. 87-967, 1961 U.S.C.C.A.N. 2631.

Although the DOJ has used the Wire Actto prosecute individuals accused of usingwire facilities to place bets on sportingevents,43 the author is unaware of anyreported decision in which the Wire Acthas been enforced with respect to pari-mutuel wagering on horse races.44

Seventeen years after the passage of theWire Act, Congress passed the IHA. IHAexplicitly states, “It is the policy ofCongress in this chapter to regulateinterstate commerce with respect towagering on horse racing, in order to fur-ther the horse racing and legal off-trackbetting industries in the United States.”45

To that end, IHA provides “an interstateoff-track wager” on a horse race may beaccepted. Originally, IHA defined aninstate off-track wager as “a legal wagerplaced or accepted in one State withrespect to the outcome of a horse racetaking place in another State.”46 InDecember 2000, however, Congressamended IHA and expanded the defini-tion of “an interstate off-track wager” toinclude: [A] Pari-Mutuel wager, wherelawful in each State involved, placed ortransmitted by an individual in one Statevia telephone or other electronic mediaand accepted by an off-track betting sys-tem in the same or another State, as wellas the combination of any Pari-Mutuelwagering pools.”47

When Congress amended IHA to expandthe definition of “interstate off-trackwager,” DOJ did not comment directlyon the proposed amendment.Nonetheless, Congress had previouslyreceived notice that DOJ had strongobjections to any such amendment.48

For the three years prior to the amend-ment of IHA and during the five yearsfollowing its enactment, Congress con-sidered a number of bills to prohibitInternet gambling. Representatives ofDOJ frequently testified beforeCongress and expressed DOJ’s beliefthat, in spite of IHA, businesses whichfacilitated betting on horse races overthe Internet were violating the WireAct.49 A DOJ official explicitly stated asmuch in a congressional hearing inMarch 2000.50

Nevertheless, nine months later,Congress passed the amendment to IHA,which explicitly permitted off-trackwagers on horse racing to be placed viatelephone or other electronic media.

The amendment to IHA should further beconsidered against the backdrop of theearlier proposed legislation seeking to pro-hibit Internet gambling. Over the courseof the three years preceding the amend-ment to IHA, several bills were considered,the most significant of which were HouseResolution 3125 and Senate Resolution692 (both entitled the “Internet GamblingProhibition Act of 1999”).

Both of those bills would have added anew section to Title 18 of the UnitedStates Code, 18 U.S.C. § 1085 that wouldhave prohibited Internet gambling.Significantly, however, both the Houseand Senate versions of the bill containedexceptions stating that the prohibitionon Internet gambling would not beapplicable to “any otherwise lawful betor wager” on a live horse race made inaccordance with IHA.51

The Internet Gambling Prohibition Actof 1999 passed 90-10 in the Senate, butfailed to pass in the House. Subsequentefforts to prohibit Internet gamblinghave also not been successful. At thetime Congress amended IHA, it was fullyaware of the tension between IHA andthe Wire Act and nevertheless intendedto promote its policy of furthering theoff-track betting industry by permittingelectronic and Internet off-track wager-ing on horse racing under the conditionsof IHA, as amended.

Implied RepealAlthough implied repeals of statutes arenot favored, a well-recognized instanceof implied repeal occurs where provi-sions of a later act irreconcilably conflictwith provisions of an earlier act.52

Statutory provisions will not be consid-ered to be in irreconcilable conflictunless there is a “positive repugnancy”between them and they “cannot mutual-ly coexist.”53 The legislature’s intent torepeal an earlier statute “must be ‘clearand manifest.’”54

Another principle of statutory construc-tion involves conflicts between generaland specific laws. “Where there is no clearintention otherwise, a specific statute willnot be controlled or nullified by a generalone, ‘regardless of the priority of enact-ment.’”55 A contrary intent will be foundonly where a construction that overrulesthe more specific enactment is “absolutelynecessary” to give the later, general enact-ment effect.56

Here, IHA is not only the most recentlyenacted of the applicable federal statutes atissue, it is more specific than the Wire Act,and, thus, should control over the moregeneral criminal provisions found in theWire Act with respect to horse racing. Onceagain, the ultimate issue is whether IHAand the Wire Act irreconcilably conflict.

When IHA and the Wire Act are readtogether, it appears they clearly conflictwith each other. The Wire Act prohibitsthe use of a wire communication facilityfor the “transmission in interstate or for-eign commerce of bets or wagers”57 onany sporting event or contest even intwo States where such betting is legal.58

IHA, on the other hand, permits the place-ment and acceptance of wagers “placed ortransmitted by an individual in one Statevia telephone or other electronic mediaand accepted by an off-track betting sys-tem in the same or another State.”59

Thus, assuming all other requirements ofIHA are satisfied, the placement of a pari-mutuel wager by an individual in State Athrough an off-track betting systemlocated in State B via either telephone orthe Internet would be legal pursuant toIHA, but illegal under the Wire Act.

Clearly, then, the statutes are in directconflict with each other, at least as theyrelate to the placement of “interstateoff-track wagers” on horse races provid-ed that the requirements of IHA are notviolated. Accordingly, the Wire Actshould be viewed as partially repealed tothe extent it prohibits conduct IHAclearly authorizes.60

43 United States v. Jay Cohen, 260 F.3d 68 (2nd Cir. 2001).

44 Also, see Internet Gambling Prohibition Act of 1999: Hearing Beforethe Subcommittee on Crime of the House Committee on theJudiciary, 106th Cong. (Prepared Statement of Steven S. Walters,Chair, Oregon Racing Commission).

45 15 U.S.C. § 3001(b).

46 15 U.S.C. § 3002(3) (1994).

47 15 U.S.C. § 3002(3) (2000).

48 Internet Gambling Prohibition Act of 1999: Hearing on H.R. 3125Before the Subcommittee on Crime of the House Committee on theJudiciary, 106th Cong. 59 (March 9, 2000) (Testimony of Kevin V.DiGregory, Deputy Assistant Attorney General, Criminal Division).

49 Ibid.

50 Ibid.

51 S. 692, Senate Report 106-121, The Internet Gambling ProhibitionAct.

52 Branch v. Smith, 538 U.S. 254, 274 (2003); Randall v. Loftsgaarden,478 U.S. 647, 661 (1985).

53 United States v. Mitchell, 39 F.3d 465, 472 (4th Cir. 1994) (quotingRadzanower v. Touche Ross & Co., 426 U.S. 148, 155 (1976)).

54 Watt v. Alaska, 451 U.S. 259, 267 (1981) (quoting United States v.Borden Co., 308 U.S. 188, 198 (1939).

55 Radzanower, 426 U.S. at 153 (quoting Morton v. Mancari, 417 U.S.535, 550- 51 (1974)).

56 Ibid.

57 18 U.S.C. § 1084(a).

58 18 U.S.C. § 1084(b).

59 15 U.S.C. § 3002(3).

60 E.g., Greenless v. Almond, 277 F.3d 601, 608-09 & n.8 (1st Cir.2002) (standard Medicaid reimbursement procedures irreconcilablyconflict with subsequent enactment permitting states to use tobac-co settlements for any appropriate expenditure); Granite StateChapter v. Federal Labor Relations Auth., 173 F.3d 25, 27-28 (1stCir. 1999) (anti-lobbying restrictions in appropriations act irrecon-cilably conflicted with other provisions permitting such lobbying).



As such, the statutes cannot mutuallyexist, and “where provisions in two actsare in irreconcilable conflict, the later act,regarding the extent of the conflict, con-stitutes an implied repeal of the earlierone.”61 This seems especially evident herewith respect to IHA and the Wire Act.

Congress, through its passage of theWire Act and other anti-gambling acts,obviously declared an important nation-al policy to suppress organized gamblingactivities.62 In passing IHA, however,Congress also declared their policy “toregulate interstate commerce withrespect to wagering on horse racing, inorder to further the horse racing andlegal off-track betting industries in theUnited States.”63

Moreover, Congress found “the Statesshould have the primary responsibilityfor determining what forms of gamblingmay legally take place within their bor-ders,”64 the federal government should“act to protect identifiable nationalinterests,”65 and “in the limited area ofinterstate off-track wagering on horseraces, there is a need for Federal action toensure States will continue to cooperatewith one another in the acceptance oflegal interstate wagers.”66

All of these findings suggest Congressspecifically intended to carve out a verynarrow exception to its general anti-gam-bling policy, and that, with respect to thelimited area of off-track pari-mutuelwagering on horse races, it wishes to pro-mote and further, rather than inhibit andrestrict, legal off-track interstate pari-mutuel wagering on horse races.

Furthermore, Congress amended IHA todefine interstate off-track wagers asspecifically including wagers placed “viatelephone or other electronic media.” Tothe extent that the Wire Act prevents thefurtherance of that stated policy andconflicts with such amended language, itwould appear IHA implicitly repeals theWire Act as it relates to “interstate off-track wagers.”

One further indication that Congressintended to permit wagering on horseraces through electronic means can beseen in a recent amendment to the U.S.Tax Code. In October 2004, as a result oflobbying efforts by the NationalThoroughbred Racing Association,Congress eliminated a 30 percentincome tax withholding requirement onincome derived from gambling winnings

by foreign nonresident aliens in certain,limited circumstances.

In enacting the American Jobs CreationAct of 2004,67 Congress amended theincome tax portion (Subtitle A) of theInternal Revenue Code by providing anexclusion for:

Gross income derived by a nonresidentalien individual from a legal wageringtransaction initiated outside the UnitedStates in a pari-mutuel pool with respectto a live horse race...in the UnitedStates.68 [Emphasis added.]

It would seem that a wagering transac-tion initiated outside the United Stateswith respect to a live horse race in theUnited States would, from a practicalstandpoint, necessarily need to be placedby telephone or the Internet.

Furthermore, this amendment of theInternal Revenue Code is meaningfulbecause Congress explicitly recognizesthat a wagering transaction initiated out-side the United States with respect to alive horse race in the United States may,in fact, be legal.

If all wagering transactions were madeillegal by the Wire Act, the reference to“legal wagering transaction” in theInternal Revenue Code amendmentwould be superfluous. Furthermore, theInternal Revenue Code, as a general rule,taxes income derived from all sourcesincluding illegal activities.

It seems quite odd that if Congressbelieved that such wagering transactionsare illegal, it would cause winnings fromsuch wagering transactions to movefrom being included in income to beingexcluded from income for federalincome tax purposes.

Despite the apparent irreconcilable con-flict between the Wire Act and IHA, theU.S. Trade Representatives have also

argued that IHA does not “repeal” theWire Act (or the Travel Act or the IllegalGambling Business Act) in a recentWorld Trade Organization (WTO) dis-pute brought by Antigua and Barbudaover the cross-border supply of gamblingand betting services.69

Like DOJ, the U.S. Trade Representatives’arguments relied upon the fact that theWire Act is a criminal statute, and IHA isa civil statute. The U.S. Trade Represen-tatives argued that criminal statutes canonly be repealed if done explicitly ratherthan implicitly.70 Unfortunately, theauthor has found no rules of statutoryconstruction or case law to support theU.S. Representatives’ argument.

IHA appears to conflict irreconcilablywith the Wire Act. In enacting IHA, andits amendment, Congress clearly manifested an intent to specifically per-mit the transmission, placement andacceptance of interstate pari-mutuelwagers, something the Wire Act clearlyprohibits.

Of the two Acts, IHA was enacted later intime and is more specific with respect tothe subject matter of transmitting orplacing pari-mutuel bets or wagers onhorse races. The application of rules ofstatutory construction lead to the con-clusion that IHA implicitly repeals theWire Act with respect to the placementor transmission of pari-mutuel bets orwagers on horse racing.

The foregoing conclusion is bolstered byCongress’ most recent enactment, in theAmerican Jobs Creation Act of 2004, ofan exclusion from U.S. income tax. Thisincome tax exclusion expressly recognizes legal bets can be placed ortransmitted from outside the UnitedStates by foreign nationals on horse racesconducted inside the United States.

61 Posadas v. Nat’l City Bank of New York, 296 U.S. 497, 503 (1936).

62 Stephen S. Walters, Chair, Oregon Racing Commission, testifiedthat the Wire Act’s prohibitions simply did not apply to bets andwagers placed through licensed ADW hubs because Congress neverintended to prohibit legalized off-track betting; but rather enactedthe Wire Act to prohibit illegal gambling conducted by organizedcrime. See Internet Gambling Prohibition Act of 1999: HearingBefore the Subcommittee on Crime of the House Committee on theJudiciary, 106th Cong.

63 15 U.S.C. § 3001(b).

64 15 U.S.C. § 3001(a)(1).

65 15 U.S.C. § 3001(a)(2).

66 15 U.S.C. § 3001(a)(3).

67 American Jobs Creation Act of 2004, H.R. 4520, P.L. 108-357, TitleIV, § 419(a), 118 Stat. 1513, 108th Cong. (September 22, 2004) (codified at 26 U.S.C. § 883).

68 26 U.S.C. 872(b)(5).

69 Interestingly, on June 13, 2003, Antigua and Barbuda (hereinafter“Antigua”) requested the Dispute Settlement Body of the WorldTrade Organization (WTO) to establish a panel for the resolution ofa dispute about state and federal laws of the United States affectingcross-border supply of gambling and betting services. On November10, 2004, the WTO panel held that the United States had made specific commitments under the GATS to provide unlimited marketaccess with respect to gambling and betting services. The UnitedStates appealed the report of the panel and, on appeal, the WTO’sAppellate Body upheld, albeit for different reasons, many of theWTO panel’s findings on April 7, 2005. Most interestingly, theUnited States did not expressly challenge, refer to, or request thatthe WTO Appellate Body reverse the WTO panel’s finding that theUnited States had made specific commitments under the GATS toprovide unlimited market access with respect to gambling and betting services. While the decision of the WTO Appellate Body isinteresting, a decision of the WTO Appellate Body cannot affect thevitality of a federal criminal statute.

70 Ibid, para. 362, p. 119.

The German Federal ConstitutionalCourt in Karlsruhe (theBundesverfassungsgericht, or BVerfG) hasmade its decision on the state monop-oly in the area of sports betting whichexists in Germany.1 Many of the peopleaffected — in particular privateproviders and procurers of sports bets —had hoped to finally receive clarifica-tion and legal security in this marketwhich has developed in Germany inrecent years.

The BVerfG determined the statemonopoly on sports betting in its pres-ent form, stipulated in the BavarianState Lottery Act, violates the constitu-tional right of freedom of profession andthus is unconstitutional. At the sametime, the legislator was held to beobliged to modify the regulations on theoperation and procurement of sportsbets by December 31, 2007, subject tothe requirements set by the BVerfG.

The decision is based on the same crite-ria which the European Court of Justice(ECJ) developed in the Gambelli case.2

The main purpose of the establishmentof a state monopoly on betting, theBVerfG explained, is the fight againstaddiction to gaming and betting.3 Thestate’s fiscal interests, however, cannotbe used to justify a monopoly.4

The judges determined the present formof practice of the betting monopolydoes not meet these requirements.5

Most importantly, marketing, saleschannels and presentation of Oddset’soffers were said to not be actively aimedat a reduction of gaming addiction andproblematic gaming behavior.6

The court held the Bavarian StateLottery Act may continue to be applied,subject to the court’s guidelines, until itsstatutory reorganization. The legislatoris left with two ways to eliminate thepresent unconstitutional situation7 —the retention of the monopoly or a lib-eralization. The legislator now has adeadline until the end of 2007 to pass anew statutory regulation.

Should the legislator wish to maintainthe existing monopoly on sports betting,the BVerfG has stipulated a series of pre-requisites for the state-owned providers.

The most important restrictions willprobably be the restrictions on market-ing as well as the prohibition of anykind of advertising which goes beyondpure information.

In order to comply with the prerequi-sites set by the BVerfG, a large part ofthe present advertising in print media,radio, and television would have to bediscontinued and numerous sponsoringcontracts would have to be cancelled.Furthermore, the establishment of a bet-ting TV channel, online advertising, aswell as perimeter-board advertising atnumerous football grounds will not beadmissible. Online offers as well as bet-ting via text messages or mobile tele-phones must also be discontinued. Asfar as the prevention of addiction is con-cerned, the main objective is to pursueactive educational measures; it will notbe sufficient to just have informationbrochures available.

The Bavarian State Lottery Act does notcontain any regulations aimed at secur-

ing these purposes. Thus, the legislator isrequested to eliminate these regulatorydeficits should he opt for maintainingthe monopoly.8 Furthermore, the BVerfGregards an independent controllingbody, which would supervise the compli-ance with the regulations independentlyof the state-owned provider — and of fis-cal interests — as indispensable.

With regard to the state-ownedprovider, Oddset, the court determinedthat it has to immediately establish a min-imum of consistency between the aim of thelimitation of betting enthusiasm and thefight against betting addiction […].9

Thus, the guidelines mentioned abovemust in principle be implemented now.The state is not allowed to use the tran-sitional period for an expansive market-ing of bets. Until the time of the newregulation, advertising, going beyondfactual information on the type of bet-ting possibilities and actually invitingaddressees to bet, is prohibited.10

As the BVerfG has determined the crite-ria of German law for the justification ofa monopoly correspond to those in theGambelli decision, this means that theprerequisites of the Gambelli decisionfor a justification of a monopoly are notmet either. Therefore, the monopoly

The Future of Sports Betting in GermanyBy Drs. Wulf Hambach and Hendrik Schöttle

1 BVerfG (Federal Constitutional Court), Judgement of 28.03.2006, Ref: 1 BvR 1054/01.

2 BVerfG, l.c., par. 144

3 BVerfG, l.c., par. 98.



6 BVerfG, l.c., par. 134, 137, 140






also represents a violation of the free-dom of provision of services.11

Community law does not provide forinterim terms, during which a violationof basic freedoms granted by Europeanlaw would be admissible.12

Prof. Peter M. Huber, Chair of PublicLaw and State Philosophy at theLudwig-Maximi l ians -Univers i tä tMunich, therefore thinks it is possiblethat local authorities who close pri-vate betting shops may be faced withmassive claims for compensation ofdamages should the ECJ overthrowthe monopoly.13

One alternative would be to go back toa monopoly that is exclusively aimedat the prevention of gambling addic-tion. However, the question remainswhether the state-owned provider,Oddset, would be able to sustain thiseconomically. There are a growingnumber of providers active interna-tionally on the Internet — a field

which Oddset now has to vacate.Oddset will finally not only lose mar-ket shares but probably will have togive up this market altogether andaccept its fate as a niche provider.

Even if it may look different at firstsight, much speaks in favor of a liberal-ization. The first exploratory discussionshave started on Federal and State levels.One possibility would be a reorganiza-tion in the form of a sports betting actenabling private providers to obtainlicenses. This may in the end also be inthe state providers’ own interests.Oddset would not nearly be restricted asseverely in its presentation in the case ofa liberalization of the betting market asit would be if the state monopoly wasmaintained. One example: in GreatBritain, a liberalized, but regulatedsports betting market has been existingfor some time, which makes highdemands on the issue of licenses.Experience obtained there has beenincluded in the Gambling Act.

The fact that a liberalization of the gam-bling market can indeed be consistentwith aims such as the protection againstaccompanying delinquency, addictionprevention and protection of minors,can be seen in the example of GreatBritain. Even the prevailing financialinterests of the state could be consideredby using appropriate models of taxa-tion. Thus, in the end, a liberalization isalso in the state-owned providers’ inter-est as this could be realized under farless restrictive framework conditionsthan the perpetuation of the monopoly.

Dr. S. Wulf Hambach and Hendrik Schöttleare Attorneys-at-Law for the firm Hambach& Hambach, Munich, Germany.

11 See also Dübbers/Kartal in ZfWG 2006, 33 (34).

12 Dübbers/Kartal in ZfWG 2006,

13 On this topic see article "Wettbüros hoffen auf Beistandvon der EU – Experte: Schadensersatz von den Kommunen“ (Betting shops looking for help from the EU - Expert: Damage compensation from local authorities) in the newspaper Münchner Merkur of 30.03.2006.

[email protected]



Since 1931, when the first gaming licensewas issued in Nevada, the expansion ofcasino-style gaming has exploded world-wide with over 3,000 casinos and over4,700 gaming venues, including: dog andhorse race tracks; card houses (how canwe outgrow poker?); cruise ships; jai laiarenas; and bingo parlors that all offerslots and/or table games.

As the industry continues to grow theworld over, gaming expansion meansthat the security and surveillanceindustry will impact gaming regula-tion and law.

The major driving force has been thedigital convergence of computer hard-ware, networking, and software applica-tions implemented worldwide. Somepeople (including those in security solu-tions) use computer technology that isover five years old, including Windows95 or even Windows 3.0 applications.

Yet, due to constant changes in securitytechnology, the upgrade pathways seemnever-ending. As a result, the consumermarket drives surveillance teams to pro-vide a higher level of safety and securityfor guests and employees.

Likewise, federal laws also require busi-ness continuity, ethics, and disasterrecovery planning as a staple in currentsurveillance policy. Now, casino guestshave come to expect better protectionand care when they visit.

Consequently, failure to provide servic-es or to meet patron expectations hasgiven rise to litigation and regulatoryoversight. Not meeting these expecta-tions may provide the opportunity for aguest to pursue claims, or to increase thefrequency of claims which, in turn,places a burden on the general counseland risk management process.

Today, the Chief Information Officer(CIO) and the Chief Security Officer(CSO), or Security Director, must devel-op improved partnerships at the seniorlevel that should provide an opportuni-ty for decision making to be drivenproactively from the top down. Theissue of how technology will be usedand implemented to achieve desiredresults, or for extending the life of com-puter hardware, should be considered.

Using the history of past behavior topredict future behavior has been a meas-uring block by the legal community fora very long time. The casino industryhas made significant contributions tothe advancement of digital video appli-cations since 9/11.

For example, the Security ChiefsAssociation in Las Vegas has formedpartnerships with federal, state, andlocal Homeland Security programs totest many varied technologies. Thesehave included using image recognitionto read, for example, license plates onvehicles entering parking garages andvalet parking areas. The system also hasthe capability to recognize and alert sur-veillance about vehicles driving on thehighway at freeway speeds.

Essentially, imagine an “Amber Alert”that is not confined to a single highway,but one that touches security networks,so when a threat and/or vehicle havebeen identified, thousands of strategi-cally-placed cameras in parking garagesand on highways would be activelylooking for the same target.

This type of application can and willcross jurisdictional boundaries from thetesting that takes place within securityand surveillance departments on the LasVegas Strip. With that in mind, considerDigital Video Recording (DVR) partiallyresponsible for such advances in surveil-lance technology.

Managing New SoftwareThe ideas of yesterday, once thought tobe far-reaching and unattainable, are inreality just around the corner and madepossible by Digital Video Recorder(DVR) and computer software advances.Computer processing power andexpanded use of computer resources hasalso improved, and video reviewprocesses, in turn, have simplified andmade managing live and archived videomore of a reality.

While the complexity of computerapplications historically deterred thetypical security or surveillance directorof the past, the evolution of IT plat-forms and relationships has clearlybeen achieved.

The final analysis of any investment innew technology will lead to positivesecurity outcomes property-wide. Betterresults may lead to achieving morehands per hour. Likewise, an updatedtechnology and security system devel-ops better and more accurate playertracking information, increases employ-ee performance data, eliminates theoccurrence of counterfeit chips, andstrengthens inventory control.

Investing in new computer applicationsmay also help balance cash drawers andwill automatically fill and creditrequests, as well as automate audit andcontrol functions. This is unmatched intoday’s analog (handwritten or linear)environment. All of these details arecrucial to providing adequate, securecustomer service in an increasinglycompetitive gaming market.

A greater focus on customer service haschanged security challenges, sinceeverything is watched electronicallyusing existing CCTV resources andintegration of software applications tobusiness processes. By providing moreareas of information or data recovery

DVR Technology Secures Surveillance Advancements

By Doug Florence


to be used for mitigation of claims,security teams can actually provideregulators new territory for considera-tion and general counsel faster accessto information.

On the DVR front, there have also beensignificant advances as it relates to theintegration to business applicationsand processes.

DVR technology allows for the integra-tion of points of sale (POS) in retail,entertainment, and food and beverage,to video systems which, in turn,reduces employee theft, credit card,and comp fraud.

With its complex video motion andobject detection system, DVRs mayreduce liability suits. The systemdetects suspicious behaviors such asrunning or unusual activity inrestricted areas. In addition, therecorder can alert U.S. HomelandSecurity in the event of a real-timethreat, and also provide authoritieswith “watch lists.”

Moreover, the updated DVRs offer“exception reporting” of financial trans-actions that allows for more securemonetary exchange.

Going digital doesn’t just mean provid-ing guests and staff with heightenedsecurity. Typical return on the invest-ment of a fully digital platform includesimproved customer service and reducedguest/employee investigation time.

New DVR technology also measurescompliance to the moving image collection (MIC), proactively alarms forpotential threats, and reduces operatingcosts, while meeting Sarbanes-Oxley Act(SOX) and Patriot Act requirements.

Legal AssistanceReality television and casino showshave raised the level of expectationthat the public has for video evidence. Today, many of these functions have already been achievedby the major representative manufacturers of DVR technology.

The investigative process in thecasino environment also requiresthat future search tools be availablein DVR software or graphical UserInterface (UI), and includes the abil-

ity to perform complex analysis ofrecorded or archived video in a simplified process.

That all legal requirements of video evi-dence are met and software applicationsthat provide the tools to establish thatthe evidentiary challenge has been metfor legal purposes include several appli-cations. For example, take into consid-eration the steps it takes to scrutinize anaverage table game. Most DVRs willtrack table game pit losses by gameincluding the time, day, week, month,and year.

Not only will the DVR track the gamedown to the minute, but it canretrieve data on all players andemployees using the system. It canalso monitor all fills and credits ofgaming checks. DVRs can also recog-nize card counting and advantageplay using its object and image sys-tem (combined with mathematicalgorithms).

Transferring data from DVR to CCTV isno problem either, since the new digitalsystem has the ability to interface itsprogram to CCTV. And with its abilityto archive, DVR technology can searchvideo by specific camera using imageand/or facial recognition.

DVR technology can also track individ-ual slot machine use by applying thesame technological benefits implement-ed for table games.

Types of DVRThe question of video quality and whatcodec to use is also of significant con-sideration; 4 CIF (Common InterfaceFormat) quality video equal to that of aDVD is what most people expect todayand what most casino surveillancedirectors desire.

This has been achieved using eitherMPEG2 or MPEG4, both quite capa-ble of meeting and exceeding theseexpectations. In reality, it comesdown to the likes and dislikes of eachsecurity or surveillance executive. Soin many cases it is up in the air forinterpretation.

The other major issue is always budget-ary. MPEG4 can offer some scale ofeconomy that MPEG2 can not.However, again, they are both quite

capable of meeting regulatory standardsthroughout the world.

On the horizon is a hybrid of MPEG2and MPEG4 that provides some bound-ary crossing between security and surveillance needs. H.264 is hailed asthe next latest and greatest codec that issupposed to provide even greater resolu-tion and compression capabilities at theexpense of consuming computer processing resources, networking needsand generation of heat.

Staying InformedEducating casino surveillance teamsis as important as any advancedtechnological system on the market.When it comes to data security, thereare many camps being formed on thesubject and it is a topic that mostregulators approach early on. A greatbook that provides a non-technicalapproach to the methodology andterminology of IT security is Know ITSecurity: Secure IT Systems CasinoStyle, by James P. Litchko publishedby Know Book Publishing and available at Borders.

Once again, one of the single great-est concerns to regulatory agencies,property executives, and security andsurveillance management is its digi-tal data that, today, is primarily usedfor marketing and business data.Tomorrow it will be the digital videoassociated with this data. Litchko’sinformative book touches on all ofthese issues and is worth taking alook at.

Finally, the educational side of thegaming industry has benefited fromASIS International’s Gaming andWagering Protection Council. ASISInternational (formerly known as theAmerican Society for IndustrialSecurity) is the predominant securityprofessional society, with over33,000 members worldwide. Toincrease the effectiveness and profi-ciency of its members, ASIS hascouncils to provide guidance andexpert advice on matters of securityin the particular fields. For moreinformation about ASIS’s Gamingand Wagering Protection Council,visit: http://www.asisonline.org.


The purpose of this article is to provide the reader with ageneral overview of the Belgian regulation related to gambling. This article does not intend to be exhaustive andthis article does not constitute and may not be deemed, inany circumstances, as legal advice. Specific opinions shouldalways be requested from professional legal advisers beforestarting any gambling activities in Belgium.

As the United States of America, Canada or Germany, Belgium is afederal state.

During the past 25 years, Belgium has progressively evolved intoa complex, three-level federal structure, the upper level of whichcomprises the Federal State, the three language communities (i.e.the Flemish French, and German-speaking community), and thethree regions (i.e. Flemish n, Brussels-Capital and Walloonregion)1.

This federalization process resulted in splitting the decision-making powers in Belgium. These powers are mainly dividedbetween the State, three Belgian regions, and the three Belgian language communities. From a legal perspective, the Belgian legislative bodies are, at national level, the House of Representativeand the Senate,2 and in each region and community, a parliamentcalled “Parlement”3. As far as the executive bodies are

concerned, the State, communities, and regions each havetheir own government.

One unexpected consequence of federalizationresulted, however, in the fact that some legal

issues in Belgium may be regulated by severallegislative bodies and regulations.

Belgian Federalization Restructures Gaming Law

By Fabrice Mourlon Beernaert and Jean-Phillippe Smeets

1 The middle level is occupied by the ten Belgian Provinces(Antwerp, Flemish Brabant, Walloon Brabant, West Flanders,East Flanders, Hainaut, Liège, Limburg, Luxembourg,Namur).The lower level is that of the Communes (more than580).

2 Responsible for managing the issues that affect the interestof all Belgians, independently of any linguistic, cultural or territorial considerations: e.g., foreign affairs, national defense,justice, finance, social security, and a major share of publichealth and domestic affairs.

3 The communities are competent to deal with matters relating to the people composing them, such as language, culture, and education. The regions are competent to dealwith territorial matters such as town planning, the environment, and employment.


This is currently the case for gambling, gambling houses, and protec-tion of players issues which are, as oftoday, governed on the one hand byfederal provisions and on the otherhand by regional provisions:

• the Act of May 7, 1999 relating togambling, gambling houses and pro-tection of players (“loi du 7 mai 1999sur les jeux de hasard, les établissementsde jeux de hasard et la protection desjoueurs”) and its implementing RoyalDecree (hereafter referred to as the“Gambling Act”), which fall withinthe competence of the Federal State ;and

• the Code of charges assimilated toincome tax (“Code des taxes assimiléesaux impôts sur les revenues,” here-inafter referred to as the CTA), whichfalls within the competence of theregions.

The Act of April 19, 2002 relating to therationalization of the operation and themanagement of the National Lotteryshould also be mentioned.

Gambling is Prohibited Unless an ExceptionThe Gambling Act fixes the main prin-ciples governing gambling issues inBelgium.

Gambling (jeux de hasard) is definedunder Belgian law as “any game or betin which a stake of an unspecifiednature is provided, and which results ineither the loss of the game by at leastone of the players or gamblers, or theprofit of some sort by at least one of theplayers, gamblers or organizers of thegame or bet, and for which there is anelement of chance, even if secondary,relating to the course of the game, theascertaining of the winner or the settling of the winnings” (Article 2 ofthe Gambling Act).

The Gambling Act does not defineeither the concept of game or the con-cept of bet further. A game, as well as abet, is a contract through which twopeople make a reciprocal agreementpromising specified winnings, on condi-tion of an uncertain event occurring.The agreement made in a game can bedistinguished from that made in a betfor in a game an uncertain event is anact to be carried out by parties, whereasin a bet this uncertain event is inde-pendent of their personal activity.

Pursuant to its Article 3, the GamblingAct does not apply to sports games norto betting on sport events (“parissportifs”) that are expressly not deemedas gambling, and consequently, do notfall under the scope of application of

the Act. In the same manner, theGambling Act does not apply to (i)games where the only stakes offered tothe player or gambler is the right to con-tinue to play for free, for a maximum offive times and (ii) card games or partygames which take place outside of ClassI and II gaming houses (see below),including games offered in amusementparks or by professional fairground stall-holders or others during village fairs,trade fairs or similar occasion, whereonly a very limited bet is required whichoffers a material advantage of low valueto the player or the gambler.

Article 4 of the Gambling Act strictlyforbids any natural or legal person tooperate, anywhere in Belgium, underany form, whether directly or indirectly,any gambling or gambling houses4 otherthan those authorized by the Gambling Act 5.It further conditions the operation ofany Gambling or gambling house(s) toobtain a prior written license granted bythe Belgian Gaming Commission(“Commission des jeux de hasard”) beforestarting any activities.

4 A gambling house (“établissement de jeux”) is defined as any place where one or several games are operated.

5 This implies that the type of gambling or amusement machines that are authorized in Belgium are strictly listed by law.


Infringement of Article 4 of theGambling Act is punished with impris-onment of six months to five years anda fine of EUR 100 to EUR 100,000 (to bemultiplied by the applicable additionalsurcharge) or one of these punishmentsonly. Penalties can be doubled if a newinfringement is committed or if a clientunder 18 years old is concerned. In anycase, the funds and machines in con-nection with the infringement areseized in favor of the State.

Gaming Commission SupervisionPursuant to the Gambling Act, author-ized gambling houses are divided in andstrictly limited to three classes:

• Class I gaming houses or Casinos;• Class II gaming houses or Arcades

(“salles de jeux automatiques”);• Class III gaming house or Bars (“débits

de boissons”).

This classification determines thenature and the number of games oper-ated in each class of gaming, the maxi-mum bet, the potential loss or win, andthe ancillary activities operated in thegaming house. Pursuant to theGambling Act, the number of casinos inBelgium is limited to nine, understoodthey may only be established in restrict-ed places. The number of arcades isfixed to 180 without geographical limi-tation, understood, however, that localauthorities may, at any time, resolve toforbid the operation of an arcade ontheir territory. The number of barsauthorized to operate gambling is free.

As mentioned above, operation of anygambling house in Belgium requiresprior deliverance of one or severaloperating license(s). There are five dif-ferent types of operating licensesunder the Gambling Act namely: A-casinos, B- arcades, C- bars, D- casinoand arcade employees, and E- sale,renting, leasing, distribution, puttingat disposal, export, manufacturing,maintenance of gambling equipment.Combination of an E-license with anA, B or C-license is prohibited.

These different licenses are delivered bythe Belgian Gaming Commission whosemain mission consists, pursuant to theGambling Act, in:

• delivering operating licenses to gamblinghouses, employees of casinos andarcades and manufacturers or suppliersof gaming machines;

• assisting the legislative and executivebodies in drafting regulation concerninggambling issues by the provision of various advices; and

• ensuring the respect of the GamblingAct.

Protection Measures It must be noted that the Gambling Actalso contains various provisions organ-izing the protection of the players andgamblers in Belgium.

Basically, it provides that casinos andarcades (Class I and II gaming houses)may only open to visitors over 21 years.It also provides that access to casinosand arcades is forbidden to certain class-es of persons; e.g., public notaries,judges, bailiffs, police officers, personswho demand to be excluded from gam-ing houses (except for the performanceof their official tasks), etc. As far as barsare concerned, the age limit forentrance falls to 18 years.

The Gambling Act also limits the maxi-mum hourly loss to EUR 25 in arcadesand to EUR 12.5 in bars. It prohibits anyform of credit in gaming houses. In casi-nos, however, the use of credit or debitcards is admitted. It is even required forany transaction exceeding EUR 10,000.However, linked jackpots are forbidden.Finally, ATM machines are not allowedin the rooms where the machines areoperated.

The Code des Taxes Assimilées auxImpôts sur les Revenus (CTA, Code of Tax and Income Tax)

The CTA mainly governs the fiscalaspects of gambling in Belgium.

Pursuant to article 43 of the CTA (asamended by regional regulations), a 15percent tax is normally levied to benefitBrussels and Flemish regions on anygross amount engaged in gambling andbetting. For the Walloon region, this taxis reduced to 11 percent.

Specific tax regimes are, in addition, setup by the CTA, e.g., for horse track

betting (whether run in Belgium orabroad) and for casinos’ profits (article44 and 45 of the CTA). These taxregimes differ from one region to anoth-er. The CTA also fixes standard taxes onautomatic amusement machines (thatare divided into five classes).

The taxes provided for by the CTA arepayable by any person accepting, evenoccasionally, bets or stakes either forone’s own account or as intermediary(article 51 of the CTA). When no per-son is especially in charge with accept-ing bets and stakes, the tax is (jointly)payable by the person(s) setting thefacilities or the machines at the dis-posal of the players (article 52 of theCTA). It must also be noted that thetax is due irrespective of the fact theorganization of the gambling or bet-ting is legal or not.

In addition to fiscal provisions, the CTAalso contains a full set of specific provi-sions governing opening and operationof horse race courses (“champs de coursesde chevaux”), as well as the acceptance ofbetting on horse races in Belgium andabroad. Pursuant to article 66, §1 of theCTA, operating of horse racing is subjectto an authorization granted by theMinister of Finance. A controversy currently exists as to whether these general provisions of the CTA also applyto betting on sport events sensu lato (inthe broad sense) which, as indicatedbefore, are not subject to the GamblingAct’s provisions at this time.

National Lottery Operation and ManagementThe operation of lotteries is prohibitedunder Belgian law, with the exception ofthe public lotteries organized by theNational Lottery (see below) and ofcharitable lotteries which have beenduly authorized in advance by the com-petent public authorities (see the Act ofDecember 31, 1851).

Pursuant to Article Six, first paragraph,sections one, two, three, and seven ofthis Act, as amended by the ProgramAct of December 24, 2002, theNational Lottery, within its organiza-tional framework and in the publicinterest, has the right to make use ofthe tools of the information society forpublic lotteries, gambling, and allforms of contest and bets.


The National Lottery has the monopolyto operate public lotteries (activitiesunder Article Six, first paragraph, section one).

Sports BettingAs briefly mentioned above, theGambling Act expressly provides it doesnot apply to betting on sport events.Consequently, betting on sport eventsonly falls within the scope of the CTA,which contains, aside from standard taxprovisions, some general provisions;e.g., obligation to notify the beginningof the activity to the tax administration;obligation to deliver tickets, cards orother documents indicating bets,games, or betting; obligation to hold adaily register computing profits; obliga-tion to constitute a financial guarantee.

Due to a recent massive fraud discov-ered in relation to betting on footballgames, it is highly probable betting onsport events shall in a short future besubmitted to provisions similar to thesecontained in the Gambling Act. The taxadministration is also in favor of such astronger regulation since it should facil-itate and secure recovery of taxes due onbetting on sports events.

The Act shall probably be amended toinclude betting on sport events in itsscope of application. A Class IV gam-bling house shall probably be created toinclude establishments accepting betson sport events and the operation ofsuch Class IV gambling houses shallprobably be submitted prior to obtain-ing an operating license delivered by theGaming Commission.

Internet Games and BettingThere is currently no doubt Internetgames or gambling are prohibited inBelgium under Belgian law, since notexpressly authorized by the GamblingAct and not belonging to any of thethree current classes of gambling housesset up by the Act. As a result, anyInternet site accessible in Belgium,which offers the possibility to gamblevia internet, constitutes an infringe-ment of the Gambling Act.

Internet lotteries are also prohibitedpursuant to the Act of April 19, 2002

(see above) and articles 302 and 303 ofthe Penal Code that punishes any person who acts in any manner in theorganization or marketing of any (unau-thorized) lottery. These prohibitionsshould, however, be revisited in thelight of the European Treaty and of theEuropean case law (see below).

An important and daily pressure isapplied on Belgian legislative bodies inorder to push them to reassess this issue.The internet phenomenon may indeednot be ignored any longer.

As of today, it seems that the reluctanceof the Belgian legislative bodies to dealwith the internet gambling issue mainlylay in practical difficulties to organizethe levy of taxes payable pursuant toprovisions of the CTA (which are, in themeantime, already due on illegal internet games and betting but neverpaid).

The Belgian National Lottery is stronglylobbying and fighting to maintain itsmonopoly on games and betting on theinternet in Belgium, as it would resultfrom Article Six of the Act of April 19,2002 that grants it an “exclusive right tomake use of the tools of the informationsociety for public lotteries, gamblingand all forms of contests and bets.” Theexistence of this “monopoly” is

frequently challenged on the basis ofthe European case law.

We assume that the legislator shouldtake advantage of the amendment ofthe Gambling Act for suggesting a legal framework relating to internet gambling. Gambling on internet shouldthus lead to a new debate in Belgium.The triggering event might result fromdecisions of the Court of Justice (e.g.C.J.C.E., 6 nov. 2003, PiergiorgioGambelli e.a., C-243/01).

Regulation of SmokingPursuant to article 2 of the Royal Decreeof December 13, 2005 that entered intoforce on January 1, 2006, it is now strictly prohibited to smoke in any localaccessible to the public in Belgium.

The casinos should however be partiallyexempted from this prohibition, provid-ed that they invest in the installation ofspecific areas reserved to the smokers,complying with various technical specifications provided for in the RoyalDecree.

Bars (“débit de boissons”) also benefitfrom a partial exemption under certainconditions.

Opening a Casino in BrusselsIn January 2006, Brussels celebrated thefirst casino opening since Belgium’sindependence.

In 1999, the adoption of the GamblingAct opened the possibility to install aninth casino in Belgium on Brussels’ territory.

It took almost seven additional years forthe Belgian authorities to decide overthe casino location and to appoint itsoperator.

Fabrice Mourlon Beernaert is an Attorney-at-law – Dechert LLP, Brussels, Belgium –Deputy Judge of the Commercial Court ofBrussels – Assistant Professor at theUniversity of Brussels (ULB) – School oflaw, and Jean-Philippe Smeets is anAttorney-at-law – Dechert LLP, Belgium,Brussels.

The Gambling Act fixes

the main principles

governing gambling

issues in Belgium.


1. Describe your position with the firm or organization.

___________________________________________________________

___________________________________________________________

___________________________________________________________

___________________________________________________________

2. How long have you been associated/employed by thisfirm/organization? _______________________(If less than fiveyears, please list your former relationships and positions on aseparate sheet).

3. When were you called to the Bar or admitted to yourProfessional Body? _____________________

4. How long have you been involved in the gaming industryor practicing gaming law? _________

5. Are you a member in good standing of the Bar or yourProfessional Body? __________________________

6. How long have you been associated/employed by thisfirm/organization? _______________________(If less than fiveyears, please list your former relationships and positions on aseparate sheet).

6. List all gaming clients, contact persons and the nature ofwork that you undertake for them (provide details on a separate sheet – if client confidentiality demands otherwise,notify membership committee).

7. Describe whether you have participated in any educationalseminars relating to gaming and if so, in what capacity.(provide details on a separate sheet)

8. Have you written any articles/books/treatises relating togaming? (provide details on a separate sheet)

9. Describe whether you have participated in any philan-thropic or charitable programs relating to gaming and if so, in what capacity? (provide details on a separate sheet)

10. Describe briefly why you desire to be a member of theIMGL and what contributions do you believe you canmake to the association? (provide details on a separate sheet)

11. Name of IMGL general member who is sponsoring

this application.

Sponsor ___________________________________________________

Date ______________________________________________________

Signature __________________________________________________

Melissa Lurie, Executive DirectorInternational Masters of Gaming LawBoulder, CO USA(303) 449-9955 office(303) 449-9977 fax(303) 641-8980 cell

Name ________________________________________________________Title _________________________________Birth Date ____________

Firm or Organization _____________________________________________________________________________________________________

Address __________________________________________________________________________________________________________________

City _____________________________________________________________________________________________________________________

State/Province ________________________________Postal Code _________________________Country _______________________________

Tel _________________________________________________________ Mobile ______________________________________________________

Fax _________________________________________________________ E-mail ______________________________________________________

( ) General Affiliated ( ) Accountany ( ) Consultant ( ) Educator ( ) In-House Counsel ( ) Regulator

Application for MembershipFax completed form to (504) 589-8218 or mail to:J. Kelly Duncan c/o Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP201 St. Charles Avenue, 48th FloorNew Orleans, LA [email protected]

a publication of the international masters of gaming … · 2009. 3. 27. · sue mcnabb, assistant...

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